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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: ajtj99 who wrote (40698)3/13/2002 10:33:50 PM
From: Zeev Hed  Read Replies (1) of 99280
 
aj, I disagree with you. I view stock buy back as nothing more than an open (and legal) way to circumvent paying taxes on dividends. When a company uses a billion bucks to buy back its shares instead of paying that billion out as dividends, this billion is not taxed. If Congress understood this simple mechanism, they would eliminate the the taxation that causes such distortion, either tax the buy backs as dividends, or don't tax the cash dividends. If cash dividends are not taxed, however, then you'll find that interest on corporate bonds should also not be taxed (because if they are, corporations would not issue debt, but only equity, or even preferred equity on which they would pay non taxable dividends). The big corporate buy backs are one of the largest tax evasion schemes, right now.

Zeev
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