In early 2003, the U.S. government cut the tax rate on dividends to a flat 15 percent instead of treating dividend payments as other income. All else being equal, how would we expect the number of companies paying dividends to change.
A) We would expect the number of dividend-paying companies to increase.
B) We would expect the number of dividend-paying companies to decrease.
C) We would expect the number of dividend-paying companies to stay relatively constant.
D) None of the above.
Answer: A
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