【单选题】

EFFECTS OF TAXATIONTo understand the effect of any tax, one must first determine who bears the burden of the tax. This is not always an easy task. Suppose that the price of a chocolate doughnut is $ 1.00. The government then imposes on sellers a tax of 10 cents per doughnut.

A、few weeks after its imposition, the tax causes the price to increase to $ 1.00. The doughnut seller clearly receives the same amount per doughnut as he or she did before the tax—the tax has not made the seller worse off.Consumers pay the entire tax in the form of higher prices. On the other hand, suppose that after the tax the price increases to $ 1.04. In this case, the seller keeps only 94 cents per doughnut, and is worse off by 6 cents per doughnut.Consumers are also worse off, however, because they have to pay 4 cents more per doughnut. In this case, retailers and consumers share the burden of the tax.The way a tax affects people is called tax incidence. The statutory incidence of a tax refers to the individuals or groups who must legally pay the tax. The statutory incidence reveals essentially nothing about a tax’’s real burden, because as previously illustrated prices may change in response to a tax. In contrast, the economic incidence of a tax refers to its actual effects on people’’s incomes. The economic incidence of a tax depends on how buyers and sellers of the commodity react when the tax is imposeD、The more sensitive consumers are to change in price, the easier it is for them to turn to other products when the price goes up, in which case producers bear more of the tax burden. On the other hand, if consumers purchase the same amount regardless of price, they bear the whole burden.Taxes have a very important impact on foreign direct investment decisions. Taxes will determine the financial structure of a subsidiary, and they will influence pricing decisions. They may also lead to the formation of holding companies.
A、MNC、(MultinationalCorporation) may decide to establish a branch rather than a subsidiary because of a given tax situation. The absence of a tax treaty between the country of a would-be investor and the nation where a foreign investment is to take place might lead to cancellation of investment plans.An unfavorable depreciation in allowance may keep the foreign investor out.Tax rates differ greatly among countries. Some countries have a zero corporate tax rate for the first few years of a new subsidiary’’s existence. This is called a tax holiday. It is an investment incentive. Most incentives, however, relate to tax-deductible items. Some countries may allow 100 percent depreciation on machinery in the year of purchase, while others merely allow an accelerated depreciation in the first years.Less developed countries usually have lower corporate tax rates in order to attract foreign investment.Countries differ greatly in determining taxable earnings. Some allow accelerated depreciation, whereby the asset (usually the plant or equipment) is written off at a substantially higher rate during the first years than in the later years. This allows for smaller taxable earnings in the early years. Other countries allow tax-free investment reserves. These are used at a later stage for investment in underdeveloped areas of countries or are sent when countries are in a recession. Taxes play an important role in foreign direct investment decisions in that______
A、taxes can affect the amount of money for which something is sold
B．taxes can prevent the incorporation of companies
C．taxes make foreign direct investment an easy task
D．taxes provide some profit choices to foreign investors