Ahmed’s personal marginal income tax rate is 15 percent at the federal level and 5 percent at the provincial level. Bindi’s federal and provincial personal marginal income tax rates are 29 percent and 13 percent, respectively. Both individuals receive dividends that are eligible for the enhanced dividend tax credit. Suppose that the combined federal and provincial corporate tax rate is 26.5 percent and the dividend gross-up rate is 38 percent, while the federal and provincial the dividend tax credit rates are 15 percent and 10 percent of the grossed-up dividends, respectively. (These were the approximate rates for Ontario taxpayers in 2015.) Assume that the corporation earns $200 in before-tax profits for each individual, all of which is distributed as dividends, after paying corporate taxes.
a. Calculate the amount of corporate income tax paid on $200 of before-tax corporate income.
b. Calculate the federal personal income tax liabilities of Ahmed and Bindi net of the federal dividend tax credit.
c. Calculate the provincial personal income tax liabilities of Ahmed and Bindi net of the provincial dividend tax credit.

d. What is the total tax rate (the combined corporate and personal income taxes) on the $200 in before-tax corporate income earned on behalf of Ahmed and Bindi?
e. How does the total tax rate faced by each person compare with their individual personal marginal income tax rate?
f. Comment on the extent to which the dividend tax credit integrates personal and corporate income taxes in the cases of Ahmed and Bindi.