Possible implications of corporate income taxes being levied on accounting profits include
1)underinvestment in new machinery and equipment;
2)a lower rate of adoption of the latest technologies;
3)faster productivity growth.

Question

Quizplus · Accepted Answer

Corporate income taxes on accounting profits can discourage businesses from investing in new machinery and equipment or adopting the latest technologies, as these investments would increase their profits and therefore their tax liability. Therefore, options 1 and 2 are possible implications. However, faster productivity growth is less likely to be a direct implication of corporate income taxes on accounting profits.

Possible Implications of Corporate Income Taxes Being Levied on Accounting