If corporations face tax disadvantages relative to partnerships, why might we continue to observe the corporate form, especially for large public businesses?
Answer to relevant QuestionsSuppose that the tax rate on personal income, tp, is equal to 40%; the corporate tax rate, tc, is equal to 35%; and the capital gains tax rate, tcg, is 20%. Also assume that the before tax rate of return on investment ...Suppose Congress was to reduce the top corporate tax rate, tc, to 30% from 35%. How would this affect the required pretax corporate return, R*c, calculated in the final line of Table 4.4? That is, recalculate the required ...Suppose you are advising a college basketball coach on whether to organize his summer basketball camps for high school students as a C corporation versus an S corporation. The taxpayer plans to operate the camps for 5 years, ...Provide an example of an asset that bears a negative implicit tax and carefully explain why the asset bears a negative implicit tax. Calculate the implicit and explicit tax rates for the following three assets. The required pretax total rate of return Ro for each asset is 20% for both the fully taxable asset and the partially taxable asset and 8% for the ...
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