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by nly 1811 days ago
Not sure what jurisdiction you're in, but the tax implications are not 'basically the same' here in the UK.

Capital gains are taxed at 20% and can be offset against personal losses, whereas dividend income is typically taxed at 32.5 - 38%, and that's after the company issuing the dividend already paid corporation tax of 19% on their end.
3 comments
ac29 1811 days ago
According to this source [0], the first £2000 of dividend income per year are tax free. So depending on how much dividend income you have, the rates could be higher or lower than in the US (who has no such exception, but lower rates on dividends for stocks held over a year).

[0] https://www.gov.uk/tax-on-dividends

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boardwaalk 1811 days ago
The US. Where I believe cap gains taxes apply to both cap gains and dividends. Which honestly makes sense me — either you “cash out” individually or the company does it for you (to pay the dividend).

From what you say, dividends seem like a negative thing taxes-wise, so why would any company opt pay them out? I’m sure there’s some intricacy there.

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KptMarchewa 1811 days ago
That's why accumulating index funds are better option.
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nly 1811 days ago
In the UK it doesn't matter. Even dividends paid inside an accumulating fund or ETF are still considered income and, if held outside of a tax sheltered account, you're supposed to (somehow) figure out how much income tax to pay and declare it.

Most people get away with doing this because they use tax sheltered accounts, or the amount would be below their tax-free allowance.

Ref: "Accumulation units – the income tax loophole that never was" - https://monevator.com/income-tax-on-accumulation-unit/

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