Johnson is correct because wealthy investors are in high marginal tax brackets and because the coupon income from bonds cannot be deferred, bonds are often unattractive investments for wealthy individuals from a tax standpoint for the taxable portion of their investment portfolio. Weinke is correct because the capital gains on the stock would only be taxed when the stock is sold and if the stock had been held for a long enough time period qualifying the gain as long term the gain would be taxed at a lower rate than short term capital gains or interest income |
