Stock buybacks are taxed at multiple points, Meb Faber notes

Stock buybacks are taxed at multiple points, Meb Faber notes
Stock buybacks face multiple U.S. taxes

Meb Faber outlines the various taxes faced by companies and investors when executing stock buybacks. According to Faber, a company is taxed first on its profits, then the owner is taxed when selling stock, followed by a 1% buyback surcharge and a 3.8% Medicare NIIT tax.

Faber adds that if state taxes are included, the number of times the proceeds are taxed increases further.

Faber has previously questioned the reliability of persistent excess returns among private equity managers, pointing to only limited consistency in venture returns. In a separate post, he drew on an analogy by Russell Napier, comparing capitalism without bankruptcy to Christianity without hell. These observations reflect his ongoing commentary on the challenges faced by companies and investors.

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