Comment by phil21 | Hacker News Reader

Comment by phil21 | Hacker News Reader

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> I struggle to apprehend the fanatic hatred of buybacks that's overwhelmed the national conversation in recent years. Buybacks seems like a rather benign and boring function of corporate finance to me.

It's not much of a struggle for me, I tend to agree with those that "hate" stock buybacks but maybe not so vehemently.

It's pretty simple to me. It breaks the social contract. The proper way to disburse excess funds that a company has no idea what to do with is via a dividend - which then gets taxed immediately. This is how investing is explained to the layman.

Stock buybacks are simply a tax avoidance scheme, the other properties of them are line noise are not material. It's not very difficult to understand why someone on a W2 salary would find this to be yet another incredibly unfair scheme against their best interests in favor of the investor class.

Of course the real problem is that dividends shouldn't be taxed in the first place.

The entire economy operates on a rule of no double taxation, except for dividends. It's income that's already taxed at the corporate level, then taxed a second time when that post-tax income is transferred to the shareholders.

>The entire economy operates on a rule of no double taxation

Citation needed here. Nowhere is such a rule explicitly written, nor is it clear why it must be the case. Further, what you’re saying is incorrect, people often claim estate taxes to be “double taxation” as well.

It’s not hard to see how many forms of taxes fall under this rubric. If corporate income taxes + taxes on dividends are “double taxation”, then couldn’t the same not be said about those same corporate income taxes and sales taxes? It’s honestly hard to think of any taxation regime that doesn’t include taxation at multiple points in a transaction chain.

Taxes exist to severe a function, and that is to extract money from the economy in a just and efficient manner. It would seem that you are implying that “double taxation” in this instance somehow violates the former, though I don’t think most would agree with you.

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