The Main Arguments in Favour of a Modified Flat-Rate Tax

question 6

Multiple Choice

The main arguments in favour of a modified flat-rate tax system (such as a proposal to place a 19% tax on all income over R200 000 with no deductions) are that it would…

• A) raise more revenue than the current tax system, and it would be simpler.
• B) raise more revenue than the current tax system, and it would lower marginal tax rates.
• C) be simpler and it would lower average tax rates.
• D) be simpler and it would lower marginal tax rates.

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Definitions:

Dividend Growth Rate

The annual percentage rate of growth of a company's dividend payments.

Required Return

The minimum return an investor expects to achieve when investing in a particular asset, taking into account its risk level.

Share Price

The current price at which a share of a company is bought or sold on the stock market.

Free Cash Flow (FCF)

The money a business produces once it has subtracted the funds used to sustain its operations and keep up its capital assets.