If dividends are taxed at higher rates than are capital gains, then high dividend payout stocks should sell at lower prices, everything else equal, compared to low dividend paying stocks. One implication of this is that investors in _____ tax brackets will tend to prefer high dividend payout stocks.

Question

Quizplus · Accepted Answer

Investors in zero tax brackets would prefer high dividend payout stocks because they are not affected by the higher tax rates on dividends, unlike investors in higher tax brackets.

If Dividends Are Taxed at Higher Rates Than Are Capital