Before Passage of the Jobs and Growth Tax Reconciliation Act

Before passage of the Jobs and Growth Tax Reconciliation Act of 2003,some argued to completely eliminate the tax rate on dividends.Calculate the tax disadvantage to organizing a U.S.business today if the Jobs and Growth Tax Reconciliation Act of 2003 passed with this provision.Consider the following firm: All earnings will be paid out as dividends,and operating income before taxes will be $1,500,000.The effective corporate tax rate is 35%,and the tax rate on corporate dividends is 0%.The average personal tax rate for partners in the business is 35%.What is the tax disadvantage?

A) $0
B) $75,000
C) $100,000
D) $125,000