Which of the following statements is most correct?
A) Indexing tax brackets reduces the extent of "bracket creep."
B) Bonds issued by a municipality such as the city of Miami would carry a lower interest rate than bonds with the same risk and maturity issued by a private corporation such as Florida Power & Light.
C) Our federal tax laws tend to encourage corporations to finance with debt rather than with equity securities.
D) Our federal tax laws encourage the managers of corporations with surplus cash to invest it in stocks rather than in bonds. However, other factors may offset tax considerations.
E) All of the statements above are true.

Question

Quizplus · Accepted Answer

All the statements are true: A) Indexing tax brackets helps prevent "bracket creep" by adjusting for inflation. B) Municipal bonds often have lower interest rates due to tax advantages. C) Interest on debt is tax-deductible, encouraging debt financing. D) Dividends from stocks may have favorable tax treatment compared to interest from bonds.

Which of the Following Statements Is Most Correct