Another reason that buybacks are preferable to shareholders is that the upper middle class and below will likely not pay tax when selling stock due to capital gains tax law, while they do at their standard income tax bracket for dividends.

Not sure that the theory about loans holds water though. You have to pay the piper one way or another, and whatever you do to earn that money is a taxable event unless you're living on a small enough amount of money to keep your sales under the threshold for 0% cap gains tax.