That is the result of a study by McKinsey & Co. The reasoning is that
tax-paying US individual shareholders own a minority of all US shares-28 percent in 2002, whereas tax-exempt US institutions and individuals who hold shares in tax-exempt accounts owned 61 percent. (The remainder was in foreign hands.) For the most part, tax-paying individual shareholders don't drive share prices, whereas nontax-paying institutional investors do: the trading activity of a company's top 40 to 100 investors-again, usually big institutional investors-accounts for 70 percent of its stock price movement.2 Since these investors are indifferent to the issue of taxes on their dividends, they are unlikely to set in motion the kinds of changes in their portfolios that would drive up share prices.
I agree with this analysis, but I still support a dividend tax cut. I think investors have become indifferent to capital appreciation vs. dividends, but if the market continues to perform poorly, the mood may shift the other way.