Congress has proposed to eliminate double taxation on dividends by reducing the personal tax on dividend income.

Question:

Congress has proposed to eliminate "double taxation" on dividends by reducing the personal tax on income. At the same time, a compensating increase in taxes on capital gains (traditionally taxed at a much lower percentage than income) has been proposed.
(a) What effect would this joint proposal have on the optimal of a firm, according to the Miller model?
(b) What effect would it have on the aggregate amount of corporate debt outstanding?
Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...