Following the 1986 Tax Act, the corporate tax rate of 34% was set above the personal tax

Question:

Following the 1986 Tax Act, the corporate tax rate of 34% was set above the personal tax rate of 28% on ordinary income, and 100% of realized capital gains became taxable at investors’ ordinary rates. What are the required before tax rates of return (that is, the capital) to corporations and to partnerships if investors require that the after tax rate of return on investments of similar risk be equal to 15% per year and the typical shareholder holds shares for 8 years? Under what circumstances might we see both a and a producing the same goods and services in light of these required before tax rates of return?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...