Use the Table for the Question(s)below

question 3

Multiple Choice

Use the table for the question(s) below.
Consider the following historical top federal tax rates in the United States:
Personal Tax Rates
-In 2005,assuming an average dividend payout ratio of 50%,the effective tax advantage for debt (τ*) was closest to:

• A)24%.
• B)18%.
• C)35%.
• D)15%.

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Definitions:

Historical Significance

The importance of an event, person, or invention in history and its lasting impact on the future.

Gibbons V. Ogden

A landmark Supreme Court case in 1824 that clarified the federal government's power over interstate commerce, ruling in favor of a broad interpretation of the U.S. Constitution's Commerce Clause.

Commerce Clause

A provision in the United States Constitution granting Congress the power to regulate commerce with foreign nations, among the several states, and with Native American tribes.

Congress's Power

The range of legislative authorities granted to the Congress by the Constitution, including making laws, declaring war, and controlling federal spending.