When Considering Personal Taxes (But Ignoring Imputation)

question 18

Multiple Choice

When considering personal taxes (but ignoring imputation) :

• A)effectively,the marginal tax rate on share income is greater than on debt income.
• B)the tax deductibility of interest could never be fully offset by the tax differential on income to debtholders and shareholders.
• C)the benefit of the tax deductibility of interest may be offset by the fact that investors need to be compensated for the higher personal tax on income to debtholders than shareholders.
• D)tax paid on company income is zero.

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Definitions:

Organizational Stakeholders

Individuals or groups that have an interest or concern in the performance and decisions of an organization, such as employees, customers, suppliers, and investors.

Role Senders

Individuals or groups that have expectations about the behavior and performance of others in specific positions.

Directly Affected

Individuals or entities that experience the immediate consequences or benefits of an action or decision.

Economic Responsibility

The obligation of an organization to act in ways that serve both its own interests and the interests of its stakeholders, ensuring its actions maintain or enhance the economic status and conditions of its stakeholders.