Portfolio Management and Wealth Planning【Reading 11】 ordinary, following, income

kim226

Which of the following has favorable tax treatment under a “flat and heavy” tax regime?

A) Capital gains.

B) Dividend income.

C) Interest income.

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The tax on ordinary income is flat and there is not a favorable tax treatment for dividend income and capital gain income. Interest income has a favorable treatment.

kim226

With respect to the “heavy dividend” tax regime and the “heavy interest” tax regime, which if either usually has a progressive ordinary income tax structure?

A) The heavy interest tax regime only.

B) Both.

C) The heavy dividend tax regime only.

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Both have progressive tax structures for ordinary income. They differ on having a less favorable tax structure for the indicated source of income.

kim226

Among global tax regimes, the common progressive tax regime has a favorable tax treatment for:

A) interest income and dividend income but not capital gain income.

B) interest income, dividend income, and capital gain income.

C) dividend income and capital gain income but not interest income.

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The common progressive tax regime tends to have a favorable tax treatment for all three.