Currencies and the Global Capital Markets Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Currencies and the Global Capital Markets

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Robert Douglas who wrote (2989)	2/4/2001 2:05:41 PM
From: Zeev Hed	Read Replies (1) of 3536

Robert, I think that the Economist" is completely missing the reasoning behind mature corporations buy backs of their shares. It is our tax system that is responsible for that new wave. Cash dividends are taxed to recipients, buy back of shares by the mature companies is simply a way to circumventing paying taxes on dividends. When a company like MRK choose to buy back billions of dollars worth of its own stock (at great multiple of book), it simply allocates what in normal times it would have paid in dividend to buy back shares. The owners of the stock simply ends up with a larger portion of the company, without paying taxes on it. View it as a "forced dividend reinvestment" scheme. I would say that if the tax code os changed to either not tax dividends, or to tax both dividends and buy backs, the mature companies will stop the buy back craze in a hurry. Zeev

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next