Suppose a Miller Equilibrium Exists with a Corporate Tax Rate

question 66

Multiple Choice

Suppose a Miller equilibrium exists with a corporate tax rate of 30% and a personal tax rate on income from bonds of 35%. What is the personal tax rate on income from stocks?

• A) 0.0%
• B) 7.1%
• C) 10.05%
• D) 45.5%
• E) None of these.

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Definitions:

General Ledger

A complete ledger detailing every fiscal activity during the lifespan of a business.

Transaction Errors

Mistakes or inaccuracies occurring in the recording, processing, or reporting of financial transactions.

Debit

Amount entered on the left side of an account.

Credit

In financial terms, credit is the ability to borrow money or access goods or services with the understanding that payment will be made in the future.