Comment by terminalshort
15 hours ago
Yes. This is correct. Share buybacks are financially equivalent to a dividend from the company's perspective, and slightly better from the shareholder's perspective because they can choose when to take the dividend and pay capital gains tax instead of income tax on it.
Qualified dividends (stock held more than 60 days) and long term capital gains are taxed at the same rate.
At any given point in time for an individual yes, but your cap gains rate can vary substantially over time. Also trusts are taxed fairly punitively.
So it's still better for everyone since only those who need or want the income have to take it.
Good point, but that only applies to individual, not corporate shareholders.