LO.6 HippCo and HoppCo operate in the same industry and report the following tax rate reconciliations in their tax footnotes. Compare and contrast the effec- tive tax rates of these two companies. HippCo HoppCo Hypothetical tax at U.S. rate 35.0% 35.0% State and local taxes 2.7 3.9 Municipal bond interest (12.5) (7.8) Tax Court settlement on disputed tax issue Effective tax rate 6.0 31.2% 31.1%