Which one of the following statements is false?
a. Most countries that trade with the U.S. do not impose a double tax on dividends.
b. Tax proposals that include corporate integration would eliminate the double tax on dividends.
c. The double tax on dividends may make corporations more financially vulnerable during economic downturns.
d. Many of the arguments in support of the double tax on dividends relate to fairness.
e. None of the above.
e
RATIONALE: All of the statements are true. Many countries (and most U.S. trading partners) do not impose a double tax on dividends. Instead, they use various systems of corporate integration that tax dividends only once. Supporters of corporate integration argue that the double tax on dividends encourages debt financing, which makes companies vulnerable during economic downturns. Finally, many of the arguments made by supporters of the dividend tax system in the U.S. relate to the distribution of taxes. In particular, they argue that the benefits of corporate integration would flow disproportionately to the wealthy.
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