The horse always has a reason for doing what he's doing. So there is a reason for rubbing the tail. Applying bitter tasting products will not eliminate the problem, just make it hard for the horse to deal with it.
Here my thoughts:
1) Make sure that it's the horse himself, who is doing the pulling/rubbing. Some horses/goats/mules will chew on other horse's tails.
2) Check if your horse has parasites and if yes, treat him for it.
3) Use a small rag with a few drops of olive oil and rub the tail dock with it. Then brush with a a good tail brush (only the dock) such as this tail brush
. This removes flakiness and dryness.
4) If this all does not help, check if you horse has any stiffness or discomfort in the sacrum (croup). Sometimes horses like to 'treat' their lower back pain by rubbing their tail high up.
Hope this helps and good luck!