Assume That the Corporate Tax Rate Is 34% and the Personal

Multiple Choice

Assume that the corporate tax rate is 34% and the personal tax rate is 35%.The founders of a newly formed business are debating between setting up the firm as a partnership versus a corporation.The firm will not need to retain any earnings,so all of its after-tax income will be paid out to its investors,who will have to pay personal taxes on whatever they receive.What is the difference in the percentage of the firm's pre-tax income that investors actually receive and can spend under the corporate and partnership forms of organization?

A) 20.4%
B) 20.8%
C) 21.2%
D) 21.7%
E) 22.1%