Question

1. Tax avoidance measures have little impact on corporate taxes in the United States. A) True. B) False

2. The absolutist argument in favor of the taxation of corporate income is based on the premise that much corporate income escapes taxation under the individual income tax laws.          A)  True. B)  False.

Answer 1

Answer to Question 1)

Tax avoidance measures are taken seriously to ensure that all sections of the society pay their respective dues to the government, However, corporate houses are always able to work their way around the same. They invest in properties, downplay their profits and create book losses to evade tax in the United States and elsewhere as well. Concepts such as transfer pricing, which is pricing intellectual property between subsidiary companies and other similar means are used to evade taxes.

It is important to note, that all expenses can be manipulated and is in fact manipulated by companies in the United States to reflect lesser profits. Thus, tax avoidance measures indeed have little impact on corporate taxes in the United States.

Thus, the correct answer is true

Answer to Question 2)

Even though, personal income tax has a lower tax rate than corporate taxes, it does not have the same exceptions as corporate taxes do. Corporates can adjust their expenses, changing their revenue and impacting their profits in a much better manner than individuals can do today.

Therefore, evasion under corporate tax laws are much higher than income tax laws and this option is false

Please feel free to ask your doubts in the comments section.