OBJECTIVES AND STRUCTURE OF TAXATION. Indicate whether each of the following statements is true or false. If the statement is false, explain in a sentence or two why it is false.

1. The primary objective of taxation is to provide governments, in an effective and equitable manner, with the resources required to finance their activities.

2. Equity in taxation requires that the same amount of tax be assessed on the first

$10,000 of income earned by a corporation and on the first $10,000 of income earned by an individual.

3. Equity in taxation requires that two corporations with equal taxable incomes pay equal amounts of tax.

4, The granting of special tax benefits to energy-related industries in the interest of encouraging development in these industries does not represent a departure from strict equity in taxation if the nation as a whole will benefit.

5. Double taxation of corporate dividends refers to the fact that corporations pay two taxes—one on their taxable income, which does not allow a deduction for dividends paid to stockholders, and a second on distributions of that income to stockholders in the form of cash dividends.

6. The double taxation of corporate dividends can be defended by arguing that corporations enjoy privileges not conferred on other business organizations.

7. The taxable income of sole proprietorships and partnerships is taxed at corporate income tax rates.

8. The principal objective of the progressive structure of corporate income tax rates is to encourage the development of small corporations.