The company buying back their stock had to buy it from someone though and that person who sold it is going to pay a tax on any gains from that sale.

I bought way too high, so when I sell my AcmeCo stock back to AcmeCo, I’ll get a tax refund!

If you want to tax profits, then tax profits. If you want to have cheesy loophole tax avoidance, stock buy-backs might be more your style.