Old, stable firms typically have large profits and would issue debt to minimize their tax liabilities. Because pension funds are largely tax exempt, they like the interest receipts that they receive from bonds. Young, growing firms should use a lot of equity financing. The tax deductibility of interest payouts would be of little use to them. Thus, their investors would gain primarily from capital gains. This is of value primarily to high-tax individuals who want to avoid highly taxed inflows.