Which of the Following Statements Regarding Implicit Taxes and Clienteles

question 109

Multiple Choice

Which of the following statements regarding implicit taxes and clienteles is not true?

• A) The reduced return of tax- favored assets is an implicit tax.
• B) Marginal investors will always benefit from the implicit tax on tax- favored investments.
• C) Market forces drive down the BTROR of tax- favored assets.
• D) Investors whose tax rate exceeds that of the marginal investor can reap some benefit through the clientele effect.

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Definitions:

Taxable Income

Income that is subject to taxes, typically calculated by deducting deductions and exemptions from gross income.

Tax Schedule

Detailed tax documents filed with the IRS to report certain types of income, deductions, or credits.

W-2

A form used in the United States to report wages paid to employees and the taxes withheld from them.

Federal Taxes

Federal taxes are financial charges imposed by the national government on income, business profits, sales, and other forms of economic activity.