What is the rationale for saying that the federal government provides a tax subsidy to corporate debtors?
A)interest and principal payments are tax deductible.
B)interest payments are tax deductible.
C)principal payments are tax deductible.
D)70 % of interest payments are tax deductible.

Question

Quizplus · Accepted Answer

Interest payments on corporate debt are tax-deductible, which effectively reduces the cost of borrowing for corporations. This is seen as a subsidy because it lowers the tax burden on companies that finance operations through debt, as opposed to equity, for which dividends are not tax-deductible.

What Is the Rationale for Saying That the Federal Government