The optimal dividend policy when dividend tax rates exceed capital gains tax rates is to pay dividends only.

Name: The optimal dividend policy when dividend tax rates exceed capital gains tax rates is to pay dividends only.
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When dividend tax rates exceed capital gains tax rates, the optimal dividend policy might lean towards retaining earnings (instead of paying dividends) to benefit from lower taxes on capital gains when the stock is sold.

The Optimal Dividend Policy When Dividend Tax Rates Exceed Capital