Effective tax rate on your share of the corporations earning

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Reference no: EM13977721

You are a shareholder in a "C" corporation. This corporation earns $5 per share before taxes. After it has paid taxes, it will distribute the remainder of its earnings to you as a dividend. The dividend is income to you, so you will then pay taxes on these earnings. The corporate tax rate is 40% and your tax rate on dividend income is 20%. The effective tax rate on your share of the corporations earnings is closest to:

Reference no: EM13977721

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