A Static Forecast of the Incremental Revenue from a Tax

question 78

Multiple Choice

A static forecast of the incremental revenue from a tax rate increase presumes that:

• A) The tax base will not change because of the rate increase.
• B) The tax base will increase by the same proportion as the rate increase.
• C) The tax base will decrease by the same proportion as the rate increase.
• D) The tax rate and the tax base are correlated.

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Definitions:

Dividends Declared

Profit distributed to shareholders that the company's board of directors has committed to pay out.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities; often referred to as stockholders' equity or owners' equity.

Owners

Individuals or entities that hold ownership in a company, possessing rights to its assets and profits.

Total Assets

The sum of all owned resources with economic value that are expected to provide future benefits to a business.