Using Table below, for each of the following years, state whether dividends were tax disadvantaged or not for individual investors with a one-year investment horizon:
a. 1985
b. 1989
c. 1995
d. 1999
e. 2005
Long-Term Capital Gains Versus Dividend Tax Rates in the
United States, 1971–2012
Year 1971−19781979−19811982−198619871988−19901991−19921993−19961997−20002001−20022003−20122013∗− Capital Gains 35%28%20%28%28%28%28%20%20%15%20% Dividends 70%70%50%39%28%31%40%40%39%15%20%
The tax rates shown are for financial assets held for more than one year. For assets held one year or less, capital gains are taxed at the ordinary income tax rate (currently 39.6dividends if the assets are held for less than 61 days. Because the capital gains tax is not paid until the asset is sold, for assets held for longer than one year the effective capital gains tax rate is equal to the present value of the rate shown, when discounted by the after-tax risk-free interest rate for the additional number of years the asset is held
