HowdyTAMU said:I don't need a lesson in buybacks.Dan Scott said:HowdyTAMU said:It's not a "distribution" any more so than the stock appreciating in value on any given day. It merely decreases the outstanding shares. Until the stock is sold there is no realized gain. The government will benefit from those closing their position in due time. This is just more thievery.Dan Scott said:HowdyTAMU said:
So they enacted a 1% tax on corporate stock buybacks this past year to reduce inflation. Now he wants to make it 4%. Why should there be any tax on buying stock at fair market value?
Tax and spend liberals! They never change, but they're making an especially evil form of them lately.
Buybacks are a tax free distribution to the shareholder. The government wanted to get their hand on it.
It increases the shareholders ownership in the corporation tax free. The corp could pay a dividend and shareholder is taxed on it. Shareholder can do whatever they want with the after tax dividends like buy more of the stock or go buy a car. The share buyback allows the shareholder to own more of the company without having to incur the tax by receiving the cash.
Imagine the horror. What if a company invents a new product and creates more equity for me in the company? Should we tax that invention or should we wait to see if it's profitable? Why not tax every patent a company produces? If a company has cash, why should the government decide what uses of that cash will be immediately taxed?
Your post was asking why there should be a tax on buybacks. I was only explaining to you the why behind it. The government is like the mafia and wants their money. Share buybacks were tax free distribution. This was a way for government to get their hand in it.
