|
...Are you saying that if you own shares of company A, the value of those shares is extracted from the company's bank account? That...doesn't sound right. I mean, I know I'm not really much of an investor, but my understanding is it works more like this: If I own 100% of the shares of company A, and the company makes a profit of $100, the company pays a tax on that profit, then has $75 in its bank account. Separately, when the company reports those earnings, its stock price rises 5%. Now, if I want to realize the value of my stock appreciation, I have to sell shares of stock, which is a completely separate, taxed, transaction. I can only transfer money from company A's bank account to my own because I own 100% of the shares, and control the entire company. I also know that treating the company like my own personal piggy bank is frowned upon (at least by people with scruples and sense), and the much more reasonable thing to do is have the company pay me a salary out of its profits. Which is another, separate, taxed, transaction. Which also makes perfect sense, because in the general case where I am not the only employee, payroll taxes are a perfectly reasonable thing, and in the more specific case where I am, I'm paying for the protection of having the corporation to take liability. |
Like the sibling comment said, thats how stocks are supposed to work. The entire reason stocks have value is because you were entitled to a dividend. So that $75 would be shared among the people who own the stock.
Now if the stock entitles you to a dividend of $5/year of the company's profits, you then might say that the company's stock is with $25 (just an example). If you think the company may become more profitable, and start paying $6, you may decide the stock is worth $26, and the inverse is true as well. Transferring that ownership of the stock is taxed, naturally.
Now we now live in a world where the largest companies don't pay a dividend, and I'm not sure how much "potential dividend revenue" factors into company valuation, but, as I understand it, this is the "backbone" of how stocks work.
>and the much more reasonable thing to do is have the company pay me a salary out of its profits. Which is another, separate, taxed, transaction.
This is taxed separately however. There is no "double-tax" here as payments to employees aren't considered the company's profit. When the company pays its employees, it's taxed once (payroll tax). When the company pays it's owners it's taxed twice (Corporate tax, then dividend tax).