2 ms·
The practice itself is whatever, but the issue is that dividends are taxed differently than capital gains. At the end of the day the investor makes the same pre
by dghlsakjg 3y ago
The practice itself is whatever, but the issue is that dividends are taxed differently than capital gains. At the end of the day the investor makes the same pre-tax income with either strategy, but they can face drastically lower tax burdens.
In other words, buybacks are a way of paying way less tax.
- chii 3y ago> In other words, buybacks are a way of paying way less tax. Not way less, just choosing _when_ to pay a tax (say, during retirement years instead of working years of one's life). I don't see anything wrong with doing this.
- dghlsakjg 3y agoYou can decide to hold long enough for the rate to go from short term to long term capital gains, which is something you can’t do with an unqualified dividend. There is also a limit to the amount of unqualified dividends you can offset with losses, which isn’t true for capital gains.