Miller and Scholes 1978 suggest that it is possible to shelter income from taxes in such a way that capital gains rates are paid on dividend income Furthermore, since capital gains need never be realized, the effective tax rate will become zero Why would this scheme not be used to shelter income, i...

The example income statement and balance sheets used to support the Miller Scholes argument are repl ...

Miller and Scholes [1978] suggest that it is possible to shelter income from taxes in such a

Question:

Miller and Scholes [1978] suggest that it is possible to shelter income from taxes in such a way that capital gains rates are paid on income. Furthermore, since capital gains need never be realized, the effective tax rate will become zero. Why would this scheme not be used to shelter income, instead of just income? The implication would be that no one has to pay taxes-ever? 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...