{"id":46792851,"user":"eru","time":1769591184,"time_ago":"12 days ago","type":"comment","content":"

Buybacks and dividends are economically equivalent. They mostly differ in tax treatment.","comments":[{"id":46793623,"user":"izacus","time":1769596925,"time_ago":"12 days ago","type":"comment","content":"

Funny how "company does tax evasion to avoid paying their share" is praised :P","comments":[{"id":46793632,"user":"eru","time":1769597018,"time_ago":"12 days ago","type":"comment","content":"

Are you sure you know what 'tax evasion' means?","comments":[{"id":46799223,"user":"izacus","time":1769623677,"time_ago":"12 days ago","type":"comment","content":"

Yes, I am.

Are you? Sorry, "tax efficiency" or what the euphemism is that tries to hide whats actually going on. :)","comments":[{"id":46808052,"user":"eru","time":1769681298,"time_ago":"11 days ago","type":"comment","content":"

'Tax evasion' is when you are breaking the law. There are various other names, like 'tax optimisation' or 'tax avoidance' is when you do it legal. And the boundaries of what you can call 'tax avoidance' are fuzzy: when in Singapore, I eat out a lot more and pay someone else to clean my home. When in Germany, taxes on labour are too high, so I cook and clean myself. Is that 'tax avoidance' and refusing to 'pay my share'?

It's definitely a change in behaviour induced by taxation.

Another example in Germany both capital gains and dividends are taxed. Capital gains are (mostly) only taxed when you sell, dividends are taxed straight away. But each year you can get a small amount of dividends tax free. So it's tax efficient to structure your capital returns to first max out that tax free allowance, and take the rest as capital gains.

That's annoying and complicated.

Singapore is simpler and has lower taxes, so I don't bother optimising anything, and just let my decision be guided by whatever makes financial sense, without worrying about taxes. (In my case, I'm investing in accumulating funds that just never pay any dividends, but instead re-invest them straight away. That way I don't have to worry about re-investing dividends manually.)

Another example: when you have a carbon tax one of the intended consequences is for companies and people to change their affairs such that they emit less CO2, thus optimising their tax bill. The system only works when people 'avoid paying their share'.","comments":[],"comments_count":0,"level":3,"url":"item?id=46808052"}],"comments_count":1,"level":2,"url":"item?id=46799223"}],"comments_count":2,"level":1,"url":"item?id=46793632"}],"comments_count":3,"level":0,"url":"item?id=46793623"}],"comments_count":4,"url":"item?id=46792851"}

Comment by eru