27. The tax structure, at any point in time, reflected economic compromises achi

Question

27. The tax structure, at any point in time, reflected economic compromises achieved through the political process. True/False.

28. Final tax legislation involves compromising divergent points of views and, therefore, it is easy searching for a consistent economic rationale within prevailing tax codes. True/False.

29. A financial manager must consider taxes in the decision process to avoid overstating anticipated income. True/False.

30. Taxes can only be levied by the Federal government. True/False.

31. Corporate taxes are generally the most pervasive and largest that a business entity pays. True/False.

32. Taxes levied on corporations are generally passed on through higher costs to customers and through lower dividends to investors. True/False.

Explanation / Answer

27. The tax structure, at any point in time, reflected economic compromises achieved through the political process. True/False.

This is true. Our government establishes the tax laws as well as the tax structure. All of these involve poplical compromised by republicans, democrats and all persoanlities with their own agenda as well as the agenda of their constituents.

28. Final tax legislation involves compromising divergent points of views and, therefore, it is easy searching for a consistent economic rationale within prevailing tax codes. True/False.

False. The first part is true in that there will always be compromise and divergent viewpoints. However, this does not make it easy to find a consistent economic rationale within the tax codes.

29. A financial manager must consider taxes in the decision process to avoid overstating anticipated income. True/False.

Absolutely true. Taxes have a huge impact on income. If we do not accurately state or account for taxes and deductions we can end up over stating income. This happens a lot with some companies and it makes company shareholder very angry and can cause them to dump the stock.

30. Taxes can only be levied by the Federal government. True/False.

Fales. Taxes are levied by state government as well as city municipalities.

31. Corporate taxes are generally the most pervasive and largest that a business entity pays. True/False.

False. Corporations have a lot of mechanisms in place where they can reduce or even completely eliminate corporate taxes through deductions, off shoring, etc. Partnership and Soleproprietor business entitys tend to pay more on average due to not being a corporation.

32. Taxes levied on corporations are generally passed on through higher costs to customers and through lower dividends to investors. True/False.

Yes, very true. Unfortunately. Companies are in it to make money so when they have additional taxes, they will either raise prices for customers or lower dividends for shareholder. In my oppinion, this is part of the reason that the government does not act aggressively enough to close corporate tax loop holes and raise corporate tax rates.

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