Suppose Congress was to increase the top personal tax rate, tp, to 45% 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 pretax corporate return for the holding periods and other parameter values as listed for the 2003 line in Table 4.4.
Answer to relevant QuestionsSuppose 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 ...Let us assume, as was true of wealthy individuals in the United States in the 1960s, that the personal tax rate is 70% and that realized capital gains are taxed at half the top personal tax rate— that is, tcg = 35%. Assume ...In the absence of tax rule restrictions, how could pensions be used to effect organizational form arbitrage? What restrictions are necessary to prevent pensions from being used in this manner? How does the concept of implicit taxes apply to investments undertaken in different tax jurisdictions? Suppose that insurance policies were fully tax exempt but (a) policies pay less than the fully taxable bond return to cover the costs of the insurance company and (b) loans can be secured only at a higher rate than the fully ...
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