Suppose James and John own a share each in a corporation facing a corporate tax rate of 50%. James and John each face marginal tax rates of 20% and 50% respectively. Suppose $2 is paid out to James and John each as dividends:

1. What is the effective tax rate on James and John if the corporate and personal income tax systems are not integrated (no dividend tax credits)? Show your work.
2. What is the effective tax rate on James and John dividend tax credits are allowed at the indi- viduals marginal tax rate? Show your work.
3. What is the effective tax rate on James and John if dividend tax credits at the corporate tax rate? Show your work.