Assume That a U

question 11

Multiple Choice

Assume that a U.S. company has a subsidiary in the United Kingdom that earned $100,000 (translated from pounds to dollars) in 1996 at a tax rate of 40 percent. The tax rate in the United States is 34 percent, and the withholding tax rate on dividends is 5 percent. If the subsidiary declares a 100% dividend, how much of its income is included in U.S. taxable income?

• A) $100,000
• B) $ 60,000
• C) $ 39,600
• D) nothing.

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Definitions:

Enlightened Self-interest

The understanding that actions which appear to benefit others can also indirectly benefit oneself, leading to outcomes that are advantageous for all parties involved.

Classical Economic

A school of thought in economics that emphasizes the importance of free markets, competition, and the self-regulating nature of economies.

Socioeconomic

Relating to or concerning the interaction of social and economic factors.

Philanthropic

Relating to the act of giving money, goods, time, or effort to support a charitable cause, usually over an extended period of time and to further a social good.