Dividends are thus actually preferred by most investors, and buybacks generally only advantage the biggest investors.
Additionally, corporations don't get special capital gains rates but do get dividends received exemptions for dividends from related company, so in many cases corporate shareholders would prefer dividends over share buybacks.
Buybacks are big not for tax reasons (because in most cases, companies make buybacks out of borrowed funds, not profits), but because they artificially inflate the stock price, which increases the value of the executive compensation packages of the executives that authorized the buyback.
Historical equities compound growth almost entirely comes from constantly reinvesting dividends to buy more shares which compounds to increase future dividends. So as an example, take a company that returns 5% of their share price and an investor pays a 20% tax rate allowing them to reinvest 4% after tax money to buy more shares. After 40 years, they'd have 1.04^40=4.8 times the proportion of the company. If the same company spent all of its money buying back shares, you'd have 1.05^40=7.039 times the company. Now you still have to pay that 20% on gains once you sell so after you'd have (1.05^40-1)*.8+1=5.83 after selling but that is still a 21% benefit for share buybacks in that example.
Also, I wouldn't call that "artificially inflate the stock price". They are reducing the number of outstanding shares thereby increasing the earnings per share which increases the amount that can be returned to each share such as through higher dividends. It is effectively reinvesting the dividends for you back into the company.
