Which of the following will lower the rate of return on a stock whose price has doubled since you bought it?
A) an increase in the capital gains tax from 15% to 20%
B) an increase in the tax rate on dividend income from 15% to 20%
C) persistently low inflation rates
D) the Federal Reserve acts to lower interest rates

Question

Quizplus · Accepted Answer

An increase in the capital gains tax from 15% to 20% will lower the after-tax return on the stock, as you will have to pay more tax on the gains from the stock's price increase.

Which of the Following Will Lower the Rate of Return