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2#
发表于 2011-7-13 13:10
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Ok...Might be easier with an example. There is a formula for this, but i like to think it out logically.
Company X has 5 dollars pretax earnings, and pays out 40% in div. Corp tax rate is 35% and dividends in the country are taxed at 30%. What is the effective tax rate?
Double taxation
The pretax earnings X the payout ratio gives us the pretax payout (5*.4 = 2). Now, the 2 dollars will be taxed at the corporate level, so we will be left with (2*(1-.35)) = 1.3 to be distributed. Then, these dividends will be taxed at 30%, so we will be left with (1.3*.7) = .91. this is the actual amount of dividends the investor gets to keep. In perecentage terms, the investor keeps .91/2, or 45.5% of the initial amount paid out. To see the tax rate, we do (1-45.5%) = 54.5%. This is the effectvie tax rate under the double taxation.
Split Rate method - same idea
Now, assume the same company pays 35% on retianed earnings, but only 20% on earnings paid out as dividiends. What is the investors effective tax rate?
Again, starting with 5 dollars, the company will pay out 2 in dividends. These will now only be taxed at 20%, so the investor receieves 2*(1-.2) = 1.6. Then, the invesotr will pay his taxes at 30%, so he will be left with 1.6*(1-.3) = 1.12. In percentage terms, the investor keeps 1.12/2, or 56% or the original amount of dividends paid out. The tax effective tax rate is 1-.56 = 44%.
In the split rate method, you can ignore the tax rate given for retained earnings. Focus on the tax rate applied to dividends. The method for calculating the effective tax rate under the split rate and double taxation method is then the same (just using different tax rates).
Imputation system - the effective tax rate will be the same as the investors individual tax rate.
The imputation system |
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