STAYER ECO 450 Week 10 Quiz 8 Ch 15 and 16
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1. The corporate income tax in the United States is levied only on economic profits.
2. Imputed interest from retained earnings are not deducted when computing taxable corporate income.
3. In general, the shorter the depreciation period allowed for tax purposes, the higher the tax burden on corporations.
4. Accelerated depreciation allows a firm to deduct more than the actual economic depreciation from its income each year.
5. Inflation causes an understatement of true depreciation cost.
6. If a corporation maximizes profits, an ad valorem tax on its profits will result in a reduction in output in the short run.
7. Assuming that the corporate income tax is not shifted to consumers in the short run, the long-run effect will be a reduction in the return to investment in both the corporate and noncorporate sector.