A primary criticism of preferential tax treatment of dividends and capital gains is

Question

Quizplus · Accepted Answer

The primary criticism of preferential tax treatment of dividends and capital gains is that it adversely affects the distribution of after-tax income. This is because the majority of the benefits of preferential tax treatment go to high-income individuals who receive more dividends and capital gains, while low- and middle-income individuals primarily receive income from wages and salaries, which are subject to higher tax rates. This exacerbates income inequality, which can have negative societal and economic effects. The other options are not criticisms of preferential tax treatment, but rather arguments in support of it (A) or neutral statements (C, D).

A Primary Criticism of Preferential Tax Treatment of Dividends and Capital