In order to raise revenue, the federal government planned

This topic has expert replies
Legendary Member
Posts: 1574
Joined: 28 Jan 2011
Thanked: 88 times
Followed by:13 members
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]

User avatar
Master | Next Rank: 500 Posts
Posts: 489
Joined: 05 Jul 2011
Thanked: 28 times
Followed by:5 members

by gmatblood » Sun Jul 31, 2011 8:35 am
IMO D, wat is OA?

Newbie | Next Rank: 10 Posts
Posts: 9
Joined: 05 May 2010
Thanked: 2 times

by sophiesaurabh » Sun Jul 31, 2011 11:42 am
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

Senior | Next Rank: 100 Posts
Posts: 67
Joined: 26 Jun 2008
Location: india
Thanked: 1 times

by dinaroneo » Sun Jul 31, 2011 4:42 pm
IMO: D

Legendary Member
Posts: 1574
Joined: 28 Jan 2011
Thanked: 88 times
Followed by:13 members

by aspirant2011 » Sun Jul 31, 2011 6:41 pm
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

Newbie | Next Rank: 10 Posts
Posts: 9
Joined: 05 May 2010
Thanked: 2 times

by sophiesaurabh » Sun Jul 31, 2011 7:42 pm
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.

Newbie | Next Rank: 10 Posts
Posts: 9
Joined: 05 May 2010
Thanked: 2 times

by sophiesaurabh » Sun Jul 31, 2011 7:43 pm
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.

Senior | Next Rank: 100 Posts
Posts: 93
Joined: 17 Jul 2011
Thanked: 1 times
Followed by:2 members

by ColumbiaVC » Sun Jul 31, 2011 8:28 pm
E[/spoiler]

Senior | Next Rank: 100 Posts
Posts: 68
Joined: 19 Jul 2011
Thanked: 6 times

by need720+ » Sun Jul 31, 2011 11:00 pm
IMO E

Legendary Member
Posts: 1574
Joined: 28 Jan 2011
Thanked: 88 times
Followed by:13 members

by aspirant2011 » Mon Aug 01, 2011 10:26 am
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

User avatar
Legendary Member
Posts: 934
Joined: 09 Nov 2010
Location: AAMCHI MUMBAI LOCAL
Thanked: 63 times
Followed by:14 members

by [email protected] » Sun Mar 31, 2013 11:09 pm
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.
IT IS TIME TO BEAT THE GMAT

LEARNING, APPLICATION AND TIMING IS THE FACT OF GMAT AND LIFE AS WELL... KEEP PLAYING!!!

Whenever you feel that my post really helped you to learn something new, please press on the 'THANK' button.

User avatar
Master | Next Rank: 500 Posts
Posts: 110
Joined: 19 Aug 2012
Thanked: 9 times
GMAT Score:640

by Ankur87 » Sun May 05, 2013 4:56 am
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.

Senior | Next Rank: 100 Posts
Posts: 45
Joined: 14 May 2014
Thanked: 1 times

by Joseph_Alexander » Fri Aug 01, 2014 1:55 am
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.

Junior | Next Rank: 30 Posts
Posts: 24
Joined: 23 Apr 2011
Thanked: 1 times
GMAT Score:760

by [email protected] » Fri Aug 15, 2014 10:46 am
What is the source of this question?

Junior | Next Rank: 30 Posts
Posts: 27
Joined: 11 Apr 2016

by thuyduong91vnu » Wed Sep 14, 2016 8:25 pm
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