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Steve -- a.k.a. Oreport
Steve -- a.k.a. Oreport, Internet Information Researcher
Category: Tax
Satisfied Customers: 1079
Experience:  Links to relevant I.R.S. materials provided with each US Federal Tax answer 1,000 Site-wide Accepts.
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Domestic legislation of states

Customer Question

Domestic legislation of most states unilaterally relieves double
taxation to
a limited extent because???                  &n bsp;                   &n bsp;                   &n bsp;   
1 Differences in other states tax systems often eliminate the
possiblity of double taxation                  &nbs p;                   &nbs p;                   &nbs p;  
2 Unilateral measures are flexible enough to deal with unique
relationships between states                                                                                
3 They allow resident taxpayers credits for foreign taxes paid                   &n bsp;        
Submitted: 11 years ago.
Category: Tax
Expert:  Steve -- a.k.a. Oreport replied 11 years ago.

After some research I am assuming that the term 'States' in your
question refers to nations rather than States within the United States
of America.



If this assumption is correct, then this reference may be helpful -- especially the part pasted below:



"Under schedular
systems a company’s profits are equally subject to corporation tax,
but dividends received by individual shareholders are taxed as a separate
category of income. There are three subtypes of schedular systems.



    Single
    schedular rate




Under this
system the dividends received by individual portfolio investors are
subject to a single separate tax rate. The schedular tax rate is usually
in the range of 15 to 30%, i.e. considerably lower than the maximum
marginal income tax rate, which is usually in the range of 40 to 60%.
In practice the schedular tax rate is often chosen in such a way that
the combined pressure of corporation tax and schedular tax corresponds
to the top marginal income tax rate. Individual portfolio investors
in the top income tax bracket thus never suffer more corporate and income
tax on their dividends than the top marginal income tax rate. Another
effect is that for a domestic entrepreneur with sufficient profits,
the choice between self-employment and an incorporated business is tax-neutral
(as is the case under the imputation system, see below). For taxpayers
in the lower income tax brackets a system with a single schedular rate
does not achieve complete neutrality, i.e. the combined pressure of
corporation tax and schedular tax is higher than the tax they would
have paid on the basis of the marginal income tax rate applicable to
them. However, for most taxpayers the combined pressure is lower than
under the classical system, and for shareholders in the high income
tax bracket the system fully relieves double taxation."


That said, I
cannot determine the correct answer from this information. 
Perhaps if you read the entire article you can figure it out.


Let me know if
you need more input.  If not, thanks for the opportunity to assist
you... I would really appreciate your honoring my efforts by 'pushing
the button' and Accepting this answer.




Good Luck!




Steve




 










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