Question

Assume Congress increases the dividend tax rate to the ordinary tax rate while leaving all other tax rates unchanged. How would this change affect the overall tax rate on corporate taxable income?

Answer 1

Increasing the dividend tax rate to the ordinary tax rate would result in an increase in the overall tax rate on corporate taxable income.

Step-by-step explanation:

Increasing the dividend tax rate to the ordinary tax rate while leaving all other tax rates unchanged would affect the overall tax rate on corporate taxable income.

Currently, the tax rate on corporate taxable income is 34% for incomes ranging from $335,000 to $10,000,000, gradually increasing to 35% for incomes above $18,333,333.

Assuming the ordinary tax rate is higher than the current corporate tax rate, the overall tax rate on corporate taxable income would increase as well.