OHHHHHHHHHH MAAAAAAAAAAAAAH GAAAAAAAAAAAAAAAAAWD!
AM I THE ONLY PERSON WHO KNOWS ABOUT TAXES ANYMORE!?!?!?!?!
If a corporation holds on the excessive amounts of cash, their taxes go up. If a company has an asset value of any kind, their taxes go up, A LOT!
Source:
https://turbotax.intuit.com/tax-tools/tax-tips/Small-Business-Taxes/Depreciation-of-Business-Assets/INF12091.htmlCorporations pay 39.1% taxes in AMMMMMURICA!
Source:
http://taxfoundation.org/article/corporate-income-tax-rates-around-world-2014Average actual payouts are around 14.2% (yay accounting! YAY TAX LAWYERS! YYYAAAY TAX CREDIT!)
Source: IRS
People, you absolutely have to realize that taxes exist, and they OBLITERATE businesses. Social programs are NOT FREE, and are usually paid for by small to medium businesses.
capital gains tax rates are higher than standard dividend tax rates.
Buy backs arent done for investors to make more money, buy backs are done usually by businesses who want to stock price to go up, which is usually because the business struggled that year.
Apple is infamous for it. Almost all under performing quarters they have ever had, they also had a buyback period. Look it up. its so close to correlative its disgusting.
Buybacks allow companies to wipe out large amounts of stock, which drive up the market value due to simple supply and demand fundamentals and percent of percents basis.
If I have 40B in cash on hand, and I need a 10% growth, I simply wipe out 5% of my stock. If I buy 5% of it, that effective means 5% less is there. Speculators will buy the other 5% up because of the known anticipation of the impending increase in my stock value. Additionally, I dont have to make nearly as much in profits as I have to spend in cash reserves to get the exact same effect. The accurate ratio is some 2.5:1, made as compared to reserves spent, to reach the same market effect.
So I blow 5B in cash reserves on stock buyouts, it makes a 10B difference, I made up my 10B short fall, I have 35B in cash reserves, my asset value didn't increase, and my cash on hand went down, so I pay less taxes on that at the end of the year.
You pay taxes on holding stocks, you pay taxes on getting paid dividends, you get taxed for dying.
The key difference, is which one pays more taxes? How do I cheat, skip, jump, and loopdy loop my way around taxes? Which one will cost me less to do?
The simple truth, dividends. Automatic reinvestment allows you to dodge almost all tax bullets minus the asset value, which you can get around inside roth accounts, as well as 401k.
Get too big of a 401k? Get a business. Max that out too? Get another business, and a business partner in a separate industry. max that out as well? Rinse lather repeat.
Realistically, flexibility is the highest valued aspect of investing, specifically due to taxes. What countries can I do this from? How can I have this taxed in this region instead of that? Can by some magic or grace of God get this to go through luxumburg? What can I do to NOT PAY TAXES?
Dividends, commodities, and certain bond types give you this. Most stocks do not.