Critical Reasoning

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]OA: I tried to solve the question in the following way i.e

We need to strengthen that federal govt. would collect lower percentage of total tax than state govt.

but I reached to the wrong OA ..........Someone please explain how can we come to the right answer[/spoiler]

IMO D, wat is OA?

aspirant2011 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]OA: I tried to solve the question in the following way i.e

We need to strengthen that federal govt. would collect lower percentage of total tax than state govt.

but I reached to the wrong OA ..........Someone please explain how can we come to the right answer[/spoiler]

IMO ans is (E): -

(E): Those who default on tax payments in state are mostly those who forget about taxes. Hence once given an opportunity are more likely to pay taxes.

Those who default on federal taxes are those who have decided not to pay. Such people are not likely to pay even after the mentioned incentive because they dint pay their taxes in the first place and now with no ADDED incentive (like reduction in the amount that needs to be paid) it is likely that they wont pay still.

What choice did you boil down to? If you mention that, I can elaborate why it is incorrect.

HTH

IMO: D

sophiesaurabh wrote:

aspirant2011 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]OA: I tried to solve the question in the following way i.e

We need to strengthen that federal govt. would collect lower percentage of total tax than state govt.

but I reached to the wrong OA ..........Someone please explain how can we come to the right answer[/spoiler]

IMO ans is (E): -

(E): Those who default on tax payments in state are mostly those who forget about taxes. Hence once given an opportunity are more likely to pay taxes.

Those who default on federal taxes are those who have decided not to pay. Such people are not likely to pay even after the mentioned incentive because they dint pay their taxes in the first place and now with no ADDED incentive (like reduction in the amount that needs to be paid) it is likely that they wont pay still.

What choice did you boil down to? If you mention that, I can elaborate why it is incorrect.

HTH

I opted choice C on the basis that if tax penalties for federal govt are more & are made free then federal govt. Will definitely get less tax returns. Plz explain why that's wrong answer choice

aspirant2011 wrote:

sophiesaurabh wrote:

aspirant2011 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]OA: I tried to solve the question in the following way i.e

We need to strengthen that federal govt. would collect lower percentage of total tax than state govt.

but I reached to the wrong OA ..........Someone please explain how can we come to the right answer[/spoiler]

IMO ans is (E): -

(E): Those who default on tax payments in state are mostly those who forget about taxes. Hence once given an opportunity are more likely to pay taxes.

Those who default on federal taxes are those who have decided not to pay. Such people are not likely to pay even after the mentioned incentive because they dint pay their taxes in the first place and now with no ADDED incentive (like reduction in the amount that needs to be paid) it is likely that they wont pay still.

What choice did you boil down to? If you mention that, I can elaborate why it is incorrect.

HTH

I opted choice C on the basis that if tax penalties for federal govt are more & are made free then federal govt. Will definitely get less tax returns. Plz explain why that's wrong answer choice

Hi aspirant2011,

If I understand you correctly, you are comparing the absolute value of the tax revenue that the Fed will collect with the absolute value of revenue that state will collect. This comparison cannot be made at all as the argument gives no information about the amount collected. It talks about % of total tax withheld by defaulters.
So when you say that "federal govt. will definitely get less tax returns" you are comparing the amount recovered by State with that recovered by Fed.

The issue at hand is about %es. So we need to find an answer that somehow relate the % of amount recovered and not the absolute amount.

Let me know if I did not understand your remark correctly and I will try to explain again.

aspirant2011 wrote:

sophiesaurabh wrote:

aspirant2011 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]OA: I tried to solve the question in the following way i.e

We need to strengthen that federal govt. would collect lower percentage of total tax than state govt.

but I reached to the wrong OA ..........Someone please explain how can we come to the right answer[/spoiler]

IMO ans is (E): -

(E): Those who default on tax payments in state are mostly those who forget about taxes. Hence once given an opportunity are more likely to pay taxes.

Those who default on federal taxes are those who have decided not to pay. Such people are not likely to pay even after the mentioned incentive because they dint pay their taxes in the first place and now with no ADDED incentive (like reduction in the amount that needs to be paid) it is likely that they wont pay still.

What choice did you boil down to? If you mention that, I can elaborate why it is incorrect.

HTH

I opted choice C on the basis that if tax penalties for federal govt are more & are made free then federal govt. Will definitely get less tax returns. Plz explain why that's wrong answer choice

Hi aspirant2011,

If I understand you correctly, you are comparing the absolute value of the tax revenue that the Fed will collect with the absolute value of revenue that state will collect. This comparison cannot be made at all as the argument gives no information about the amount collected. It talks about % of total tax withheld by defaulters.
So when you say that "federal govt. will definitely get less tax returns" you are comparing the amount recovered by State with that recovered by Fed.

The issue at hand is about %es. So we need to find an answer that somehow relates the % of amount recovered and not the absolute amount.

Let me know if I did not understand your remark correctly and I will try to explain again.

E[/spoiler]

IMO E

sophiesaurabh wrote:

aspirant2011 wrote:

sophiesaurabh wrote:

aspirant2011 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]OA: I tried to solve the question in the following way i.e

We need to strengthen that federal govt. would collect lower percentage of total tax than state govt.

but I reached to the wrong OA ..........Someone please explain how can we come to the right answer[/spoiler]

IMO ans is (E): -

(E): Those who default on tax payments in state are mostly those who forget about taxes. Hence once given an opportunity are more likely to pay taxes.

Those who default on federal taxes are those who have decided not to pay. Such people are not likely to pay even after the mentioned incentive because they dint pay their taxes in the first place and now with no ADDED incentive (like reduction in the amount that needs to be paid) it is likely that they wont pay still.

What choice did you boil down to? If you mention that, I can elaborate why it is incorrect.

HTH

I opted choice C on the basis that if tax penalties for federal govt are more & are made free then federal govt. Will definitely get less tax returns. Plz explain why that's wrong answer choice

Hi aspirant2011,

If I understand you correctly, you are comparing the absolute value of the tax revenue that the Fed will collect with the absolute value of revenue that state will collect. This comparison cannot be made at all as the argument gives no information about the amount collected. It talks about % of total tax withheld by defaulters.
So when you say that "federal govt. will definitely get less tax returns" you are comparing the amount recovered by State with that recovered by Fed.

The issue at hand is about %es. So we need to find an answer that somehow relates the % of amount recovered and not the absolute amount.

Let me know if I did not understand your remark correctly and I will try to explain again.

yup u are right, I wrongly took the comparison .........thanks for pointing out that

The correct answer is surely an E. In this question the only thing to understand is the stimulus.

Option A:- Does not affect the argument at all

Option B:- Weakens the argument or does not affect the argument at all.

Option C:- Weakens the argument

Option D:- Weakens the argument

Option E:- Strengthens the economist's argument

The explanation or the reasoning given above is absolutely correct.

D is confusing but the correct answer is E
EXPLANATION :

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.

lets assume state 1 = tax rate is 4
state 2 = tax rate is 8.
suppose people of state 1 pays tax and people of state 2 doesn't because tax rate is higher.
Federal tax is levied to citizens of all states, lets say tax rate - 4. so it is more likely that people of state 2 will pay their taxes to federal gov rather than state gov. So this choice is incorrect as it weakens the argument.


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.

by mistake state tax delinquents fail to pay state tax, so it is more likely that they will pay next time to state gov. This choice shows us that state gov would collect more percentage of total tax owed by delinquents.

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.

What is the source of this question?

Hi,

It should be out of topic, but could someone help to explain the differences between federal tax and state tax in the US? I find it difficult to understand as a non-native speaker. The tax amount that a delinquent has to pay the federal equals that paid the state, right? So what makes these delinquents not as willing to pay tax to the federal as they are to the state?

Thank for helping!:D