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My Reconsideration: Why Share Buybacks Are Pointless

Guys, you are missing a major point here.

Buybacks are a way for a company's management to efficiently give value back to their shareholder base. Think about this -- if you increase the dividend, then all recipients of said dividend have to pay income tax on the increase. If you instead use that money to retire shares, each shareholder owns a larger percentage of the business (and future cash flows) and does NOT have to foot an increased and clearly suboptimal tax burden. The shareholder can realize this stored value when convenient and pay only long-term capital gains on this, as opposed to normal income tax.