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When Americans filed their tax returns this year, the United

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When Americans filed their tax returns this year, the United

by varun289 » Sat Mar 02, 2013 11:34 am
When Americans filed their tax returns this year, the United States Treasury Department collected $315.1 billion in
tax revenue, a 13.4% increase over last year. Yet the number of tax returns filed by employees did not increase
significantly over the past year. Each of the following, if true, could explain the simultaneous increase in tax
revenue collection and the unchanged number of employee tax returns filed EXCEPT:
"¢ During this year, the number of women who re-entered the workforce as employees, after taking time off to raise
children, was greater than the number of people who retired from the workforce.
"¢ Many retired workers owed more in taxes this year due to an increase in dividends and capital gains on their stock
investments.
"¢ Last year, tax revenues were unusually low because the stock market experienced a marked decline, and many
taxpayers reduced their taxable income with capital losses.
"¢ Compared with previous years, a greater percentage of the total tax revenue this year was collected from small
businesses and corporations.
"¢ The employees who filed tax returns were paid higher wages this year than they were in the past, and thus owed
more to the government in taxes per person.
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by srcc25anu » Sat Mar 02, 2013 12:18 pm
Question stem asks which one explains tax inc - N (number of taxpayers) DID change
IMO A
b suggests tax inc - n unchanged
C suggests tax dec. - n decrease / unchanged
D not relevant as it talks about % of tax collected from small businesses and not about number of tax payers
E suggest tax inc- n unchanged
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by dixitnagpal » Sat Mar 02, 2013 2:02 pm
varun289 wrote:When Americans filed their tax returns this year, the United States Treasury Department collected $315.1 billion in
tax revenue, a 13.4% increase over last year. Yet the number of tax returns filed by employees did not increase
significantly over the past year. Each of the following, if true, could explain the simultaneous increase in tax
revenue collection and the unchanged number of employee tax returns filed EXCEPT:
"¢ During this year, the number of women who re-entered the workforce as employees, after taking time off to raise
children, was greater than the number of people who retired from the workforce.
"¢ Many retired workers owed more in taxes this year due to an increase in dividends and capital gains on their stock
investments.
"¢ Last year, tax revenues were unusually low because the stock market experienced a marked decline, and many
taxpayers reduced their taxable income with capital losses.
"¢ Compared with previous years, a greater percentage of the total tax revenue this year was collected from small
businesses and corporations.
"¢ The employees who filed tax returns were paid higher wages this year than they were in the past, and thus owed
more to the government in taxes per person.
A) Yes it explains why tax could increase .
B) Yes it explains why tax could increase
C) Yes it explains why tax could increase
D)Greater Percentage but may be other employees could ahve submitted lesser.So
it doesnt clearly explains that tax return increased.
E) Yes it explains why tax could increase .

Please let me know official answer.
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by David@VeritasPrep » Sun Mar 03, 2013 5:21 pm
This is similar to an official question:

This question is a paradox since it asks you to EXPLAIN the simultaneous increase in tax revenues and unchanged number of tax returns...The correct answer is the one that does NOT explain this paradox.

The key to a paradox is to state the two portions of the paradox in the following way:

State the first part of the paradox that is the "simple fact" that does not need to be explained. For this problem the simple fact is that "the number of tax returns filed by employees did not increase significantly." There is no need to explain this one further. It is just a fact.

Now state the second part of the paradox, and this is the part that needs to be explained - it is the surprising fact. In the case of this problem the surprising fact is that "the tax revenue increased 13% over last year." Now this needs to be explained in light of the simple fact.

Remember that the answer that does not Explain the increased revenue is the correct one.

Choice B) shows how revenue could go up from retired workers - remember that the simple fact discusses the number of returns by Employees so choice B is outside of this limitation. It does explain so eliminate.

Choice C) shows that last year was the unusual one and that tax revenue could rebound without having to find additional taxpayers - just more capital gains. It explains so eliminate.

Choice D) Also shows revenue coming from a source other than employees, so this one also sidesteps the simple fact and allows for more revenue. It does explain so eliminate.

Choice E) This one is the most anticipated answer, right? How do you get a higher total without having more employees file returns? Well you get each one to make more money and pay more taxes! More per person makes a greater total. It explains so eliminate.


Choice A) This answer does not explain the surprising fact, but explains the simple fact and so it does not explain the paradox. You see, this choice simply tells us that more women re-entered the workforce and offset the number of retirees, so it explains the number of tax returns filed by employees but it does not explain the increase in tax revenue. So Choice A is the correct answer since it DOES NOT explain.
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