I believe double taxation actually refers to paying the corporate tax rate as well as the shareholder paying their dividend tax rate. Not capital gains.
I misspoke and meant to say corporate tax which would be more correct. But the tax rate also effectively applies to capital gains, since the value of a company is the NPV of its future distributions.
If Apple were suddenly permanently excepted from income tax tomorrow through some bizarre legislation, its future dividends would be proportionally increased, and its market cap would (should) rise to match.
The water is muddied due to a few factors such as inflation, uncertainty around future tax rates, potential tax holidays for overseas income etc. But they're in very general terms two sides of the same coin.
> the shareholder paying their dividend tax rate. Not capital gains.
In theory, dividends and stock buybacks perform the same function. Because stock buybacks have more favorable tax implications (capital gains instead of income), they are often favored by institutional investors (who also like the added liquidity).
If Apple were suddenly permanently excepted from income tax tomorrow through some bizarre legislation, its future dividends would be proportionally increased, and its market cap would (should) rise to match.
The water is muddied due to a few factors such as inflation, uncertainty around future tax rates, potential tax holidays for overseas income etc. But they're in very general terms two sides of the same coin.