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Tax rates on some dividends is higher. It is absolutely a tax dodge. It depends entirely on whether it is an ordinary or a qualified dividend. This is true in
by dghlsakjg 3y ago
Tax rates on some dividends is higher. It is absolutely a tax dodge.
It depends entirely on whether it is an ordinary or a qualified dividend. This is true in the US, other jurisdictions vary
- WalterBright 3y agoThe tax difference between ordinary or qualified dividends is the same as the tax difference between short and long term gains. It's simply not a tax dodge.
- dghlsakjg 3y agoSo there is a tax difference, we both agree. If I bought a stock yesterday and they issued a dividend today, there is no way for me to avoid the higher tax rate. If I bought it yesterday and they decide to do a buyback today, I can hold it until the lower capital gains rate kicks in, thereby avoiding the higher tax rate. See how I can avoid paying the higher tax rate? Play some more games with tax loss harvesting, and the buyback option gives you a lot more ability to pay lower taxes. With the dividend there is a limit to the amount of loss you can offSet with short term losses. Simply put, in any given situation capital gains is likely to give you a better option to pay lower taxes.