The finance minister of Beamland announces that the corporate tax rate will increase from 35% to 40% in order to finance the country's budget deficits. As a counterbalance, she simultaneously announces the decrease in the dividend income tax from 10% to 5%, claiming that the change will have no effect on domestic investors. Do you agree with her statement? Explain.

Answer rating: 100% (QA)

The finance ministers statement may not fully capture the potential impact on domestic investors as ... View the full answer