A newly established firm wants to establish a pension plan for its employees. The firm hires you to prepare a report comparing a defined benefit pension plan with a defined contribution pension plan. The firm also requires a recommendation from you as to which plan better suits them. On questioning management, you learn that the firm’s future profitability is likely to be highly variable—sometimes large profits, at other times possible losses. You also learn that the firm is an aggressive tax planner. What type of pension plan would you recommend? Explain your reasoning.
Answer to relevant QuestionsThe accompanying table can be used to make paired comparisons of the desirability of salary, deferred compensation, and pensions as a function of a = current and future employer marginal tax rates, b = current and future ...In principle, countries can band together to create uniform tax laws to ensure that each dollar of income is taxed once and only once. What are the costs and benefits of such uniformity from the perspective of lawmakers? California Graphics is a U.S. corporation with $200 million of U.S.-source income and $10 million of foreign-source income. In addition, California Graphics has three-quarters ownership of a Canadian partnership that has ...Do all U.S. corporations have an incentive to reduce their foreign taxes paid? Why or why not? How does the definition of foreign- source income affect the computation of the foreign tax credit limitation?
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