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"If stock buybacks were against the law, corporate taxes were higher, capital gains taxes were higher, and loopholes were closed, we wouldn't see this" ... we w
by PeterisP 4y ago
"If stock buybacks were against the law, corporate taxes were higher, capital gains taxes were higher, and loopholes were closed, we wouldn't see this" ... we would see the same thing but only with dividends.
It doesn't change the decision whether it's better to reinvest in growth or pay out the profits to the owners; the primary reason for buybacks is that in the current tax law it's a slightly less tax-burdened way of paying out profits to shareholders as "dividends-that-technically-are-not-dividends".
- ummonk 4y agoI generally agree (and think stock buybacks are just better because they let investors time their tax realizations), but I'll point out that the way dividends are reported makes it more public when a company is not reinvesting in growth. Perhaps stock buybacks should be reported as prominently as dividends, rather than buried in cash flow statements.