Taxing Corporations and Their Shareholders
The proposals for reforming business tax as set out here are based on the principle that corporations should be taxed on their profits retained and distributed as dividends at 25%. This rate is dictated by political common sense. The competition for investment in Europe and beyond shows that an attractive rate of corporation tax is the only way to meet increasing competition from other countries. This is not to overlook the fact that taxes also serve to finance public services, which in turn influence whether companies are willing to move in. But other countries are increasingly managing to combine favourable tax structures with offering adequate services as an attractive ‘bundle’; the Federal Republic of Germany must also attempt to follow such a location policy.
KeywordsAcquisition Cost Capital Gain Equity Capital Taxable Dividend German Corporation
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