Biden to Urge Quadrupling New 1% Tax on Stock Buybacks

wsj.com

8 points·djkivi··6 comments

Money is going to be returned to shareholders. It should be the same rate whether dividends or buybacks. Buybacks make more sense since people that want off the bus that take the deal while those who want to stay on reduce their dilution.

I don't have any particular argument with the sentences you wrote, taken one at a time, but #s 1 & 2 seem to me to be in conflict with 3.

If buybacks are primarily a tax dodge, then any fringe benefits will be lessened as companies return to dividends.

And if we are going to tax similar things equally, then an obvious next target is ETFs versus mutual funds.

But actually reconciling the differences properly isn't on the table, is it? There's just going to be a new tax that sort of goes in that general direction, I assume. Making things even more complicated.

How does letting investors decide whether they want capital returned to them make it a tax dodge? In a sense that I can dodge taxes by not selling my shares?

Buybacks dont just raise the share price, they also entrench the ownership of the company. It should be heavily taxed.

Why?

Buybacks consolidate ownership, make the company recede from the public. As a side-effect, it often can raise the price, which I don't have any strong opinion on right now, but "feels" shady. But withdrawing your company from the public with buybacks, going more private, certainly seems like the sort of thing we absolutely positively should tax the shit out of.

Distribution of money has no real impact on ownership. It lets every shareholder decide what to do with that money as they may. This is a much more neutral act.

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