Solved

Consider the Following Methods of Taxing a Corporation's Income

question 56

Multiple Choice

Consider the following methods of taxing a corporation's income:
a) A flat tax, as opposed to a progressive tax, is levied on corporate profits.
b) A system whereby a corporation calculates its annual profit and notifies each shareholder of her portion of the profits.The shareholder would then be required to include this amount as taxable income for her personal income tax.The corporation does not pay a tax.
c) A system where the federal government continues to tax corporate income through the corporate income tax but allows individual taxpayers to receive, tax free, corporate dividends and capital gains.
Which of the methods above would avoid double taxation?

Definitions:

Profit-Maximizing

The process or strategy undertaken by a firm to achieve the highest possible profit from its operations, considering factors like pricing, production, and cost management.

Labor Demand Curve

A downward-sloping curve that represents how the quantity of labor demanded by employers changes as the wage rate changes.

Purely Competitive

Purely competitive markets are those in which numerous small firms compete against each other, and the price of goods or services is determined by the market with no single participant having significant control over it.

Imperfectly Competitive

Describes markets where individual sellers have some control over the prices due to lack of perfect competition, includes monopolistic competition, oligopoly, and monopoly markets.