A firm in Australia earns a pretax profit of $A20 per share. Suppose that it pays a corporate tax of $6 per share (30 percent tax rate) in taxes. The firm pays the remaining $A14 in dividends to a shareholder in the 45 percent marginal tax bracket. What is the amount of additional tax paid by the shareholder under an imputation tax system?

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Pretax profit per share 20 A Tax paid per share by th... View the full answer