Continuing the discussion from Objectivist Criticism of Consumerism and Making Money | Podcast [curi video]:
FYI @Lebowski:
Within dividends there are two categories: ordinary dividends and qualified dividends. Qualified dividends are dividends for which you held the stock for a certain number of days around the ex-dividend date. Ordinary dividends are just those that aren’t qualified dividends. Qualified dividends are taxed at the same rate as long-term capital gains. Ordinary dividends (as you might guess) are taxed the same as short term capital gains – meaning they are taxed at ordinary income rates. So on the matter of tax rates, your second guess (that there is basically parity in the treatment of dividends and capital gains) is correct. The minimum required holding period to get qualified dividend treatment is shorter than 1 year, so from that angle you could argue that dividends are treated somewhat preferentially. But from the POV of a longer-term investor the tax treatment is very similar.