Suppose That the Corporate Tax Rate Is 10 Percent in the U.S

Multiple Choice

Suppose that the corporate tax rate is 10 percent in the U.S. and 40 percent in Canada. Which of the following statements would be true?

A) Canadian firms with U.S. subsidiaries would tend to try to increase corporate profits in Canada.
B) A firm headquartered in Canada would tend to charge a U.S. subsidiary low prices for any goods and services sold to it.
C) A U.S. subsidiary of a Canadian firm would try not to show a profit.
D) Canadian firms would try to charge their U.S. subsidiaries as high a price as possible for any goods or services they sell to them.
E) None of the above.