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Assume that the corporate tax rate is 3 4 % and the personal tax rate is 3 3 % . The founders of a newly
Assume that the corporate tax rate is and the personal tax rate is The founders of a newly formed business are debating between setting up the firm as a partnership versus a corporation. The firm will not need to retain any earnings, so all of its aftertax income will be paid out to its investors, who will have to pay personal taxes on whatever they receive. What is the difference in the percentage of the firm's pretax income that investors actually receive and can spend under the corporate and partnership forms of organization?
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