Question: Suppose that Congress sets the top personal tax rate on interest and dividends at 42% and the top rate on realized capital gains at

Suppose that Congress sets the top personal tax rate on interest and

dividends at 42% and the top rate on realized capital gains at

Suppose that Congress sets the top personal tax rate on interest and dividends at 42% and the top rate on realized capital gains at 15%. The corporate tax rate stays at 22%. Assume capital gains are half of equity income. a. Compute the difference between the total corporate plus personal taxes paid on debt and the total taxes on equity income if all capital gains are realized immediately. (Do not round intermediate calculations. Round your answer to 4 decimal places.) Difference b. Compute the difference between the total corporate plus personal taxes paid on debt and the total taxes on equity income if all capital gains are deferred forever. (Do not round intermediate calculations. Round your answer to 4 decimal places.) Difference

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!