Which of the following statements regarding the company income tax is most correct?
A)equity considerations are more easily satisfied than efficiency considerations when company income is taxed
B)the company income tax does not distort the incentives of customers
C)the company income tax is the best example of why the flypaper theory of tax incidence is correct
D)many economists believe that workers and customers bear much of the burden of the company income tax

Question

Quizplus · Accepted Answer

The company income tax is a complex issue with various opinions, but many economists tend to believe that workers and customers bear much of the burden of this tax. This is because when companies are taxed, they may raise the prices of their products/services to maintain their profits, which can impact customers. In addition, companies may reduce wages and benefits for their workers to maintain their profit margins, leading to an indirect impact on workers. Therefore, D is the most correct statement. A is incorrect because efficiency is usually considered more important than equity in taxation. B is incorrect because the company income tax can lead to distortions in incentives. C is incorrect because the flypaper theory of tax incidence is controversial and not universally accepted.

Which of the Following Statements Regarding the Company Income Tax