In Order to Avoid Double Taxation and to Escape the Frequently

question 68

True/False

In order to avoid double taxation and to escape the frequently higher tax rate applied to capital gains,stockholders generally prefer to have corporations pay dividends rather than to retain their earnings and reinvest the money in the business.Thus,earnings should be retained only if the firm needs capital very badly and would have difficulty raising it from external sources.

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Definitions:

Esteem Needs

Psychological requirements for respect, self-esteem, and recognition, as part of Maslow's hierarchy of needs.

Affiliation Needs

The human desire to belong to a group, be accepted, and maintain relationships with others, driving social interactions.

Security Needs

Basic human requirements for safety and stability, including physical safety, employment, resources, health, and property, as essential for well-being.

Physiological Needs

Basic human necessities required for survival, such as food, water, shelter, and sleep; the foundational level in Maslow's hierarchy of needs.