> For whatever reason we don’t as a society let “tech” markets mature. We demand growth long after everyone is satisfied.
The reason is tax law and it applies to all companies not just tech. Removing the double-taxation of dividends would fix so much of our economy.
If you run a stable, no-growth but profitable company, and each year return the profits to the owners (shareholders) in the form of a dividend, that's bad because the income is first taxed when the corporation declares it as income and then again when the shareholders receive the dividend.
If instead you don't issue the dividend, but re-invest to grow the company, then the value of the shares can increase without creating a taxable event for the shareholders.
We could avoid a lot of the boom-bust cycles, enshittification of products and other economic problems if we just structured tax law to encourage stable, profitable companies issuing boring predictable dividends instead of our current system that requires infinite growth.
>that's bad because the income is first taxed when the corporation declares it as income and then again when the shareholders receive the dividend.
Why is that bad? The first case is income to the corporation and they pay income tax on it. The second is income to the shareholder and they pay income tax on it. How is it different from the corporation's employees paying income tax on money received from the corporation?
>If instead you don't issue the dividend, but re-invest to grow the company, then the value of the shares can increase without creating a taxable event for the shareholders.
That's true as long as the shareholders never sell their shares. Once they do, it's a taxable event like the dividend.
> How is it different from the corporation's employees paying income tax on money received from the corporation
The money paid to employees is only taxed once.
We (pretty much everywhere) tax companies on their profits, but individuals on their income. It seems unfair, it leads to some weird but accepted inequalities (like the cost of renting a house vs buying), but no alternative seems to work.
Or tax sale of shares the same so there is no loophole and you can either spend it on something useful or lower taxes for everyone instead of just for shareholders.
This is nonsense because companies can and do replace dividends with share buybacks.
While sometimes criticized as "executives juicing the stock price because that's what their incentives are tied to", in fact investors recognise that buybacks are economically equivalent to dividends, but tax-advantaged (for exactly the reasons you gave, they don't create a taxable event for the shareholders).
One problem with buybacks is it's socially difficult for companies to replace dividends with buybacks - by convention, dividends are usually issued on a regular schedule and buybacks are ad-hoc, so "cutting dividends" is seen as a sign of a company that no longer has reliable profits. But that really is just convention and it would only take a few companies switching to normalize this.
The reason is tax law and it applies to all companies not just tech. Removing the double-taxation of dividends would fix so much of our economy.
If you run a stable, no-growth but profitable company, and each year return the profits to the owners (shareholders) in the form of a dividend, that's bad because the income is first taxed when the corporation declares it as income and then again when the shareholders receive the dividend.
If instead you don't issue the dividend, but re-invest to grow the company, then the value of the shares can increase without creating a taxable event for the shareholders.
We could avoid a lot of the boom-bust cycles, enshittification of products and other economic problems if we just structured tax law to encourage stable, profitable companies issuing boring predictable dividends instead of our current system that requires infinite growth.