Corporations may raise money by issuing stock or bonds

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Corporations may raise money by issuing stock or bonds. A corporation may deduct bond payments from its taxable income as a business expense. However, payments to stockholders (dividends) are made out of after-tax income. If corporate income tax rates are increased, what will be the effect on how corporations raise money? Will this tend to stabilize the economy or destabilize it?

Reference no: EM131176228

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