ECO 410 Week 9 Quiz – Strayer
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Quiz 8 Chapter 15 and 16
Multinational Tax Management
15.1 Tax Principles
Multiple Choice
1) The
issue of ethics in the reporting of income and the payment of taxes is a
considerable one. The authors state that most MNEs operating in foreign
countries tend to follow the general principle of:
A)
"when in Rome, do as the Romans do."
B) full
disclosure to the tax authorities.
C)
maintain a competitive playing field by cheating as much as the local
competition, no more, no less.
D) none
of the above
2) Which
of the following is an unlikely objective of U.S. government policy for the
taxation of foreign MNEs?
A) to
raise revenues
B) to
provide an incentive for U.S. private investment in developing countries
C) to
improve the U.S. balance of payments
D) All
of the above are objectives.
3) A
________ tax policy is one that has no impact on private decision-making, while
a ________ policy is designed to encourage specific behavior.
A) flat;
tax incentive
B)
neutral; flat
C)
neutral; tax incentive
D) none
of the above
4) Which
of the following is NOT an example of a tax incentive policy?
A) The
federal government gives a tax credit to MNEs that make domestic capital
improvements but not foreign capital improvements.
B)
Corporations are allowed to take a direct tax credit for each dollar of
matching donations they make to institutions of higher education.
C) A tax
law is passed that makes interest on property non tax-deductible, but interest
payments on durable goods are.
D) All
are examples of a tax incentive policy.
5)
Toyota Motor Company operates in many different countries and pays taxes at
many different rates. However, they always pay the same rate as their local
competitors. Toyota Motor Company is operating in an environment of ________
tax policy.
A)
domestic neutrality
B)
foreign neutrality
C)
territorial approach
D) none
of the above
6) The
United States taxes the domestic and remitted foreign earnings of U.S. based
MNEs no matter where the earnings occurred. This is an example of a/an ________
approach to levying taxes.
A)
worldwide
B)
territorial
C)
neutral
D)
equitable
7) The
United States taxes all earnings on U.S. soil by both domestic and foreign
firms. This is an example of a ________ approach to levying taxes.
A)
worldwide
B)
neutral
C)
territorial
D) none
of the above
8) Bacon
Signs Inc. is based in a country with a territorial approach to taxation but
generates 100% of its income in a country with a worldwide approach to
taxation. The tax rate in the country of incorporation is 25%, and the tax rate
in the country where they earn their income is 50%. In theory, and barring any
special provisions in the tax codes of either country, Bacon should pay taxes
at a rate of:
A) 75%.
B)
62.5%.
C) 0%.
D) 50%.
9) The
territorial approach to taxation policy is also termed the ________ approach.
A)
source
B) ethical
C)
greedy
D)
location
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