A Tax Provision Has Been Discussed That Would Add an Additional

question 97

Multiple Choice

A tax provision has been discussed that would add an additional marginal tax rate of 39% to be applied to an individual's taxable income in excess of $800,000. If this provision were to become law, what overall distributional impact would it have on our current income tax system?

• A) Proportional.
• B) Regressive.
• C) Progressive.
• D) Disproportional.
• E) None of the above.

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Definitions:

Debt-equity Ratio

A financial ratio that gauges a corporation's leverage by dividing its total obligations by its stockholders' equity.

Sustainable Rate

A Sustainable Rate often refers to the growth rate at which a company can continue to grow without needing to increase financial leverage.

Capital Budgeting

The process by which a business evaluates and selects long-term investments that are consistent with the firm's goal of maximizing owner wealth.

Capital Structure

The mix of debt and equity financing used by a firm to fund its operations and growth.