Critical Reasoning

Between 1977 and 1989, the percentage of income paid to federal taxes by the richest one percent of Americans decreased, from 40 percent to 25 percent. By the end of that same period, however, the richest one percent of Americans were paying a larger proportion of all federal tax revenues, from 12.7 percent in 1977 to 16.2 percent in 1989.

Which of the following, if true, contributes most to an explanation of the discrepancy described above?

(A)Between 1977 and 1989, the Internal Revenue Service increased the percentage of its staff members responsible for audits and tax collection.

(B) Between 1977 and 1989, the before-tax income of the richest one percent of Americans increased by over 75 percent when adjusted for inflation.

(C) Between 1977 and 1989, many of the richest one percent of Americans shifted their investments from taxable to untaxable assets.

(D) Between 1977 and 1989, the tax rate paid by middle-income Americans was reduced, but several tax loopholes were eliminated.

(E) Between 1977 and 1989, the amount of federal taxes paid by the richest one percent of Americans increased by $45 billion, while the amount paid by all Americans rose by $50 billion.

IMO Answer: B

Even though the percentage tax decreased over all tax amount increased hence the income must have increased.

Vinayak

IMO - B

D would be mi choice.

IMO - D

The taxes paid by the richest Americans could have reduced and yet their contribution as a percentage could have increased only when the other contributors(middle income Americans) have reduced their contribution to the tax revenues. This is supported only by D.

I think the answer should be either C or D.
A: Irrelevant
B: Although, the statement should be true as it stands (as per the provided information) but does nothing to explain the discrepancy.
C: If many of the richest one percent of Americans shifted their investments from taxable to un-taxable assets then the 16.2 percent of the remaining taxable income can be much lesser than the 12.7 percent of original taxable income.
So, this is a possible answer choice.
D: Although, tax rate was reduced for middle-income Americans but the removal of tax loopholes may have amounted in greater percentage of federal tax from middle-income Americans.
So, this is also a possible answer choice.
E: Cannot be verified.

Between C and D, I think C is more plausible answer choice because it directly explains the cause of discrepancy.

What is the answer?

IMO:C

OA: B

I will go with option C