Total effective tax rate on the corporation earnings

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Consider a C corporation. The corporation earns $0.5 per share before taxes. After the corporation has paid its corresponding taxes, it will distribute 1.5% of its earnings to its shareholders as a dividend. The corporate tax rate is 30%, the tax rate on dividend income is 20%, and the personal income tax rate is set at 28%. What are the shareholder's earnings from the corporation after all corresponding taxes are paid? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer; or if the answer is $500, write enter 500 as an answer.

Consider a C corporation. The corporation earns $0.5 per share before taxes. After the corporation has paid its corresponding taxes, it will distribute 1.5% of its earnings to its shareholders as a dividend. The corporate tax rate is 30%, the tax rate on dividend income is 20%, and the personal income tax rate is set at 28%. How much is the total effective tax rate on the corporation earnings? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer; or if the answer is $500, write enter 500 as an answer.

Reference no: EM133121441

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