What effect would it have on the aggregate amount

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Reference no: EM131247302

Congress has proposed to eliminate "double taxation" on dividends by reducing the personal tax on dividend income. At the same time, a compensating increase in taxes on capital gains (traditionally taxed at a much lower percentage than dividend income) has been proposed.

a) What effect would this joint proposal have on the optimal capital structure of a firm, according to the Miller model?

b) What effect would it have on the aggregate amount of corporate debt outstanding?

Reference no: EM131247302

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