Difference between the total corporate plus personal taxes

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Question - Suppose that Congress sets the top personal tax rate on interest and dividends at 43% and the top rate on realized capital gains at 17%. The corporate tax rate stays at 25%. Assume capital gains are half of equity income.

a. Compute the difference between the total corporate plus personal taxes paid on debt and the total taxes on equity income if all capital gains are realized immediately.

b. Compute the difference between the total corporate plus personal taxes paid on debt and the total taxes on equity income if all capital gains are deferred forever.

Reference no: EM133070936

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