In order to raise revenue, the federal government planned a tax amnesty program that allows tax delinquents to pay all owed tax without added financial penalty. However, economists projected that the federal government would collect a far lower percentage of total tax owed by delinquents than did state governments implementing similar programs.
Which of the following, if true, would most contribute to an explanation of the economists' projections?
A. Tax amnesty programs are only successful if they are widely publicized.
B. Most people who honestly pay their state tax are equally honest in paying their federal tax.
C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.
D. The state tax rate varies considerably from state to state, but the federal tax is levied according to laws which apply to citizens of all the states.
E. Unlike most federal tax delinquents, most state tax delinquents fail to pay state tax because of an oversight rather than a decision not to pay.
[spoiler]Answer:D/E[/spoiler]
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gmatmachoman
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IMO E....
Decision overpowers oversight..So Federal Tax Policy may not be that succesful as compared to State Tax Policies for Tax Deliquents..
Decision overpowers oversight..So Federal Tax Policy may not be that succesful as compared to State Tax Policies for Tax Deliquents..
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vinayakdl
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okigbo wrote:hmm..I went with C..
If financial penalties are higher for federal than state, then states would collect more %-wise if financial penalties are forgiven..
Where am I going wrong in my logic?
Thanks.
Since the argument is comparing situations when the penalties are taken off C is not relevant. I will go with E as well.
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singhag
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maihuna wrote:In order to raise revenue, the federal government planned a tax amnesty program that allows tax delinquents to pay all owed tax without added financial penalty. However, economists projected that the federal government would collect a far lower percentage of total tax owed by delinquents than did state governments implementing similar programs.
Which of the following, if true, would most contribute to an explanation of the economists' projections?
A. Tax amnesty programs are only successful if they are widely publicized.
B. Most people who honestly pay their state tax are equally honest in paying their federal tax.
C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.
From little different perspective
If Federal require high penalties than any opportunity which wave off this penalties should have more takers than the state which have less penalties...
D. The state tax rate varies considerably from state to state, but the federal tax is levied according to laws which apply to citizens of all the states.
E. Unlike most federal tax delinquents, most state tax delinquents fail to pay state tax because of an oversight rather than a decision not to pay.
Seems to be correct if most of the people who have decided to pay have paid the federal tax on time whereas other who do not want may not be attracted by the offer to wave off the penalty. In State people will be attracted because they failed to pay due to oversight.[spoiler]Answer:D/E[/spoiler]
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singhag
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maihuna wrote:In order to raise revenue, the federal government planned a tax amnesty program that allows tax delinquents to pay all owed tax without added financial penalty. However, economists projected that the federal government would collect a far lower percentage of total tax owed by delinquents than did state governments implementing similar programs.
Which of the following, if true, would most contribute to an explanation of the economists' projections?
A. Tax amnesty programs are only successful if they are widely publicized.
B. Most people who honestly pay their state tax are equally honest in paying their federal tax.
C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.
From little different perspective
If Federal require high penalties than any opportunity which wave off this penalties should have more takers than the state which have less penalties...
D. The state tax rate varies considerably from state to state, but the federal tax is levied according to laws which apply to citizens of all the states.
E. Unlike most federal tax delinquents, most state tax delinquents fail to pay state tax because of an oversight rather than a decision not to pay.
Seems to be correct if most of the people who have decided to pay have paid the federal tax on time whereas other who do not want may not be attracted by the offer to wave off the penalty. In State people will be attracted because they failed to pay due to oversight.[spoiler]Answer:D/E[/spoiler]
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reply2spg
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Why D is wrong?
maihuna wrote:In order to raise revenue, the federal government planned a tax amnesty program that allows tax delinquents to pay all owed tax without added financial penalty. However, economists projected that the federal government would collect a far lower percentage of total tax owed by delinquents than did state governments implementing similar programs.
Which of the following, if true, would most contribute to an explanation of the economists' projections?
A. Tax amnesty programs are only successful if they are widely publicized.
B. Most people who honestly pay their state tax are equally honest in paying their federal tax.
C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.
D. The state tax rate varies considerably from state to state, but the federal tax is levied according to laws which apply to citizens of all the states.
E. Unlike most federal tax delinquents, most state tax delinquents fail to pay state tax because of an oversight rather than a decision not to pay.
[spoiler]Answer:D/E[/spoiler]
Sudhanshu
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outreach
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D
Does not tell why people would pay more for state than federal.
E
People do not pay state tax bcz they forgot. These people would pay if reminded and given the opportunity to do it penalty free.
It also implies that do not pay federal tax because they intentionally do not want to. These people are far less likely to repay once penalties are removed because they didn't want to pay in the first place when there were no penalties.
Does not tell why people would pay more for state than federal.
E
People do not pay state tax bcz they forgot. These people would pay if reminded and given the opportunity to do it penalty free.
It also implies that do not pay federal tax because they intentionally do not want to. These people are far less likely to repay once penalties are removed because they didn't want to pay in the first place when there were no penalties.
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Joseph_Alexander
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The answer here is E.
We are trying to strengthen the conclusion that "the federal government would collect a far lower percentage of total tax (not tax + penalties) owed by delinquents (not all tax payers)".
A-Out of Scope
B-Out of Scope (we are looking at delinquents, not honest payers)
C-This would suggest that the federal government would see a higher percentage of tax collection because the benefit of the amnesty is much higher for federal tax than for state taxes
D-Out of Scope
E-The amnesty program for was successful because the unpaid taxes were due to oversight, not unwillingness to pay. Federal tax evasion is due to people fundamentally not wanting to pay tax, period. Saving on penalties does not incentivize people who have decided to not pay any tax.
We are trying to strengthen the conclusion that "the federal government would collect a far lower percentage of total tax (not tax + penalties) owed by delinquents (not all tax payers)".
A-Out of Scope
B-Out of Scope (we are looking at delinquents, not honest payers)
C-This would suggest that the federal government would see a higher percentage of tax collection because the benefit of the amnesty is much higher for federal tax than for state taxes
D-Out of Scope
E-The amnesty program for was successful because the unpaid taxes were due to oversight, not unwillingness to pay. Federal tax evasion is due to people fundamentally not wanting to pay tax, period. Saving on penalties does not incentivize people who have decided to not pay any tax.
