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Worth noting also that dividends aren't uniquely taxed. Worst case, they're taxed the same as income, but they can also be capital gains which are taxed at a l
by woooooo 2y ago
Worth noting also that dividends aren't uniquely taxed. Worst case, they're taxed the same as income, but they can also be capital gains which are taxed at a lower rate.
So any talk of incentives should include a justification of passive investment being more valuable than work for income, if someone is asking for favorable tax treatment.
- tliltocatl 2y agoWasn't aware of that. Yes, I've no clue what I'm talking about. But if buyback gains are also taxed as income when cashing out, what is the advantage of buybacks then?
- loeg 2y agoYou can defer selling capital gains for decades in a buy-and-hold portfolio, while your portfolio continues to grow. Dividends are always taxed in the current tax year. One benefit here for investors is that you can defer taking capital gains until years when you are in a lower tax bracket (e.g. retired), which you cannot do with dividends. (The US capital gains tax rate is progressive, if with fewer buckets than income. There's a 0% bucket, a 15% bucket, an 18.8% bucket, and 23.8% bucket.)
- ac29 2y agoQualified dividends are not capital gains, even if they are taxed at the same rate
- loeg 2y agoGP is clearly just talking about them being taxed at the same rate.
- ac29 2y agoMy point was that GP's assertion that "Worth noting also that dividends aren't uniquely taxed" is wrong - they are uniquely and specifically taxed, the rate just happens to currently be the same as capital gains rates.
- deleted 2y ago[deleted]