Critical Reasoning

In 1975, a province reduced its personal income tax
rate by 2 percent for most taxpayers. In 1976, the
personal income tax rate for those taxpayers was again
reduced by 2 percent. Despite the decreases in the
personal income tax rate, the total amount of money
collected from personal income taxes remained constant
from 1974 to 1975 and rose substantially in 1976.
Each of the following, if true, could help to resolve the
apparent discrepancy described above EXCEPT:
(A) The years 1975 and 1976 were ones in which
the province's economy was especially
prosperous.
(B) The definition of "personal income" used by the
province was widened during 1975 to include
income received from personal investments.
(C) The personal income tax rate for the wealthiest
individuals in the province rose during 1975
and 1976.
(D) The province's total revenue from all taxes
increased during both 1975 and 1976.
(E) A large number of people from other provinces
moved to the province during 1975 and 1976.

IMO C
c sates that
earlier total personal income=x
tax=0.02x

now total personal income=x+y
tax=0.02(x+y)

hence amount is excess by 0.02y
oa

Please explain.... OA is D

Regards,
Phil

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Let me try.... IMO D
Each of the following, if true, could help to resolve the
apparent discrepancy described above EXCEPT: -Find the one below which does not solve why the tax was constant and increase in 1976
(A) The years 1975 and 1976 were ones in which
the province’s economy was especially
prosperous. -if this is true economy improved =more money, despite reduction in rates income from tax remained constant so actually
(B) The definition of “personal income� used by the
province was widened during 1975 to include
income received from personal investments. -more income under personal income due to inclusion of more areas so despite rate decrease the income from tax remained same
(C) The personal income tax rate for the wealthiest
individuals in the province rose during 1975
and 1976.-In 1975, a province reduced its personal income tax
rate by 2 percent for most taxpayers ,this statement makes it clear the reduction was not for all but the final the total amount of money remained same so for one section rate reduced and for the other section rate decreased final rate remained constant
(D) The province’s total revenue from all taxes
increased during both 1975 and 1976. -INCOME-EXPENDITURE = REVENUE -this actually means income from tax increased but why it increase the reason is not clear
(E) A large number of people from other provinces
moved to the province during 1975 and 1976.-again more peopl are in the state population increases the income increases rate reduce same income from tax

ssgmatter wrote:Please explain.... OA is D

Regards,
Phil

We are concerned about personal income tax and not total tax revenue. D is not at all not related to argument

D is correct. we are least bothered about the province's total revenue from the IT (Income Tax)

Why can't it be "E"? How does it supports the paradox?

If "E" supports the paradox,then I believe that "D" also supports the paradox.

if let's say 20,000 people from other province moved to questioned province and those 20,000 people start paying tax, then total amount of money collected from personal income taxes will increase.

paddle_sweep wrote:Why can't it be "E"? How does it supports the paradox?

If "E" supports the paradox,then I believe that "D" also supports the paradox.