Which of the following is most effective in mitigating the double tax?
A) Shift income from high tax rate shareholders to low tax rate corporations.
B) Shift income from low tax rate shareholders to high tax rate corporations.
C) Shift income from high tax rate corporations to low tax rate shareholders.
D) Shift income from low tax rate corporations to high tax rate shareholders.

Question

Quizplus · Accepted Answer

The most effective way to mitigate the double tax is to shift income from high tax rate corporations to low tax rate shareholders. This means distributing profits as dividends to shareholders instead of keeping them within the corporation where they would be subject to the corporate tax rate. Shareholders may be subject to a lower tax rate on dividend income than the corporate tax rate, resulting in lower overall taxes paid. Shifting income to high tax rate shareholders or corporations would not be effective in mitigating the double tax.

Which of the Following Is Most Effective in Mitigating the Double