Why is cash dividend economic equivalent of share repurchase?

I would think that cash dividend is a certain percentage of share price whereas repurchase price is the whole share price. How can they be economic equivalent of each other?

what tax treatment are they talking about?

I understand that cash dividend might be taxable but what about repurchase of stock? How can that be taxable?

Thanks.

i think it would be taxable if the repurchase leads to a capital gain( repurchase price is lower than the market price). I am not sure though, but his is the only reason i can think of, correct me if i am wrong.

I believe the tax implications come if your cost basis is less than what the buyback or repurchase of shares at the value are. (Capital gains like India_28 said). I.E. you buy shares when they are $15, over one year later the company decides to buyback shares at set value of $25. You would be charged (in the U.S.) 15% or 20% of $25-$15 = $10 which is either $1.50 or $2 depending on tax bracket. Currently here in the U.S. dividend tax rates is also 15% or 20% depending on tax bracket so if a dividend was declared of say $3 per share which would equal the amount of funds that could have been used to repurchase the stock above, the effect would be the same for the shareholder.

For the company doing the dividend payment or share repurchase, its the same economically because (unless it states they’re using borrowed funds and ask you to see effect on EPS) they use their after tax income so it’s the same. It just depends on how the company wishes to use those monies.