Reference no: EM133110821

Question

(a) Taxes are classified based on whether they are applied directly to income, called direct taxes, or to some other measurable performance characteristic of the firm, called indirect taxes. Identify each of the following as a "direct tax," an "indirect tax," or something else:

(i) Corporate income tax paid by a Japanese subsid-iary on its operating income

(ii) Interest received by a U.S. parent on bank deposits held in London

(iii) Interest received by a U.S. parent on a loan to a subsidiary in Mexico

(iv) Execise tax paid on cigarettes manufactured and sold within the United States

(v) A direct contribution to the International Committee of the Red Cross for refugee relief

(vi) Deferred income tax, shown as a deduction on the U.S. parent's consolidated income tax

(vii) Withholding taxes withheld by Germany on dividends paid to a United Kingdom parent corporation

(b) What is Tax Morality?

(c) What is Tax Neutralty?