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That would be actually a nice policy: only allow buybacks using taxed profits. Unfortunately, it's not there yet
by yread 3y ago
That would be actually a nice policy: only allow buybacks using taxed profits. Unfortunately, it's not there yet
- robertlagrant 3y agoWhy would that be a good idea?
- yread 3y agoLots of corporate tax code is about taxing the money flows from the company to the physical persons. Somehow buybacks weren't taxed until recently.
- lotsofpulp 3y agoHow are buybacks not taxed? The entity selling the shares has always had to pay income tax on capital gains from selling shares.
- robertlagrant 3y agoI think this is wrong, twice: - buybacks are taxed when a person gets money for their shares, as capital gains tax - lots of corporate tax is about exactly the opposite of what you say; i.e. reaching inside a company's bank account and taxing its profits directly, rather than waiting for the money to flow out and taxing it as VAT/income tax/cap gains. A huge amount of money and effort is spent on balancing this correctly, with R&D credits, structuring profits to appear in the correct year, etc etc.
- yread 3y agoYes, but when your shares gain in value you can borrow more money on them. That is not taxed.
- happymellon 3y agoBecause buybacks in any other fashion only increase debt. It's the shareholders cashing out, so rather than a failed business with shares of $0 value, they have money and the loans are someone else's problem.
- robertlagrant 3y ago> Because buybacks in any other fashion only increase debt. What about using revenue to buy it? You don't have to use (or have) debt to buy something with revenue.
- happymellon 3y agoBecause revenue is pure income without taking costs into account. So you could still be giving away money to cash out that is owed to someone else? If your revenue is based upon fictional income then these privatised public services will become tax payer problems because they can't be shut down.
- robertlagrant 3y agoI'm not saying that it's impossible that buybacks increase debt; I'm just countering your claim that buybacks always increase debt: > buybacks in any other fashion only increase debt.
- lanstin 3y agoIt would be a simple regulatory change that would (maybe ?) substantially mitigate the harm leveraged buy outs cause the economy and society.