The first preference of taxpayers is to receive income in the form of capital gains (especially as long-term capital gains, which is usually under the control of the taxpayer). Their second preference is to receive income in the form of dividends. Both are much better forms of income than interest income or ordinary income.

They are both taxed at lower rates under the U.S. tax code. (In 2008, their rates were about 15%, compared to 30% or more for interest and ordinary income). In addition, capital gains can most easily be offset by capital losses elsewhere, and there is no interim taxation before the capital gains realization.