Property tax reassessments

This topic has expert replies
Master | Next Rank: 500 Posts
Posts: 114
Joined: Tue Mar 24, 2009 9:19 am
Thanked: 1 times

Property tax reassessments

by kobel51 » Fri Feb 28, 2014 9:23 am
Property taxes are typically set at a flat rate per $1,000 of officially assessed value. Reassessments should be frequent in order to remove distortions that arise when property values change at differential rates. In practice, however, reassessments typically occur when they benefit the government - that is, when their effects is to increase total tax revenue.

If the statements above are true, which of the following describes a situation in which a reassessment should occur but is unlikely to do so?

(A) Property values have risen sharply and uniformly.

(B) Property values have all risen - some very sharply, some less so.

(C) Property values have for the most part risen sharply; yet some have dropped slightly.

(D) Property values have for the most part dropped significantly; yet some have risen slightly.

(E) Property values have dropped significantly and uniformly.
Source: — Critical Reasoning |

User avatar
GMAT Instructor
Posts: 1052
Joined: Fri May 21, 2010 1:30 am
Thanked: 335 times
Followed by:98 members

by Patrick_GMATFix » Fri Feb 28, 2014 9:37 am
Reassessments don't occur as much as they should (when values change at differential rates), but mostly when their effect is an increased tax. So a situation in which a reassessment should occur but is unlikely to occur must be a general decrease in property values amid differential rates changes. I go through the question in detail in the full solution below (taken from the GMATFix App).

Image

-Patrick
  • Ask me about tutoring.