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I'm a little confused by the paper. Why do the stock prices have to drop with higher taxes? Wouldn't higher taxes force you into risky equities over risk-free assets as you try to achieve your after tax target?

Or is the gist that investors won't be willing to go into risky equities as they become taxed at a higher rate? Even though that's true, investors wanting higher returns don't have many other options except for equities.
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