[email protected] wrote:I came down to the options A and C and then got stuck!!! I really do not know what should be the correct explanation for ruling out the option A.
Could anyone of you explain the answer...
I will reply to your pm in thread, because there is something additional I would like to comment about
I assume you read the argument and know what it talks about: when people hide taxes, lawmakers make coercion (additional action to implement law) for having people pay taxes and increase taxes for compensating those who don't pay. This makes all other tax-payers who always pay to hide their taxes too. The conclusion made, this is vicious cycle.
This is an assumption type of question.
@MakeUrTimeCount, you are confusing *income* and *pretax income*. The
latter is analogous or just the same as *taxable income* - believe me brother, I am licensed in that area [spoiler]
certifiied auditor[/spoiler] or check here, who knows - I may lie as a non-ethical buddy ->
https://financial-dictionary.thefreedict ... tax+income . Now since we are interested in knowing which assumption should be considered here for the conclusion to be true, certainly there is no reason to believe that answer choice A is *any good* because it says the opposite to our situation. Choice A) says - Increase in taxes WILL make taxpayers to try to increase their *taxable income* = *pretax income*. Is this true? No, because, it's the way opposite to the provided in our argument, Increase in taxes will make taxpayers to decrease or *hide* their taxable income. So, choice A) is very bad choice, it's even not considered as any alternative to good choice here, because it's just very opposite to our argument and it's just bad. Quit it!
I will not be applying the negation test here yet - because this test should be applied when we are facing very tough and difficult cases, and here we saw choice A) was just very bad and we need only to move on
choice B) is also totally alien as it talks about useless for our consideration methods to detect tax evasion. This would be good in general to consider as study for tax evasion control or prevention. But here we want to know about assumptions, unstated premises, as to 'why people who pay taxes =tax-payers behave in the way described, which results in vicious cycle'. So quit choice B)
choice C) as you guys did not put this choice in SPOILER, i knew the answer already and it was very frustrating for me
I will leave this choice unconsidered and move on further, by pretending some other choices might be be good ...
choice D) read and restate this choice, as it's too verbose. What it says is restated as ~ If tax-payer hides his taxes, it's meaningless to decrease his taxes to make one not to hide *taxable income*. The fines must be introduced for these tax-payers who hide taxes to stop them from hiding *taxable income*.
Is this an interesting choice? Oh, very interesting,
BUT it talks about how to stop tax-payers from hiding *taxable income* and we need to know
not how to stop
tax evasion. What an author would assume us to know is the said 'all stuff of hiding from taxes and the happenings called as
vicious cycle'. So this is not quite what we need. As in choice B), choice D) talks about control or prevention of tax evasion. It says a bit more about such control measures, since it offers fines. Do we need to consider fines here? No, we need to consider only *an increase in tax rates* brought by lawmakers. No fines, so sorry and move on.
choice E) is very difficult and if we put this in negative (i.e. apply negation test) we could see that - When tax-payers are discriminated on the basis of tax rates, they may be caused to hide their taxes. This is really close to our answer, BUT again as in the previous choices we are explicitly told about just *an increase in tax rates* brought by lawmakers.
Tip: always read and understand argument and its premises *literally*. This is a logic test, not literature or philosophy check-up. All assumptions and inferences must strictly follow the rule of logic from their literal meaning. If you all call me dog in GMAT language, then I am meant to be *dog* not like you said dog but implied different meaning for that. You have to disclose me your assumption(s), otherwise I admit your saying literally.
Choice E) talks about an
assumption necessary, but not
an assumption sufficient. Don't be surprised and get additional notes on their differences, I often use this difference in my practice of LSAT questions. So even if the tax-payers may be induced to hide taxes because they are applied different tax rates, this is
not sufficient for us to decide about conclusion with this assumption only. Moreover, we are told about *increase in tax rates* and who knows how an increase in the rates will affect the various tax brackets (compare ratios and changes in their values, the effect is always different).
Finally, I could not locate any right answer and I am moving to the choice C) which again is not in spoiler
choice C)
When lawmakers establish income tax rates in order to generate a certain level of revenue - aha, so here is what we need
literal meaning, *lawmakers*:*an increase in tax rates*:*taxable income* -
they do not allow adequately for revenue that will be lost through evasion. <- restate the last part after hyphen (simplify).
This choice says, when lawmakers adjust *tax rate* which serves to generate revenue[spoiler] (read this very carefully as for GMAT purposes an author makes definition of tax rates here, you are not supposed to know about taxes or taxable income or pretax rates, here definition comes)[/spoiler], the lawmakers DO NOT consider (or do not consider enough/adequately) that some revenue will be lost/hided by tax-payers. The lawmakers do "not great job" and do not consider part of revenue which will be not declared and as a result will be hided from taxes.
What does choice C) mean? If lawmakers do consider all revenue for tax purposes adequately, the vicious cycle may not occur, because the situation will improve. The lawmakers will know what part of taxes or taxable income is going to be hided and they will adjust rates accordingly, then no *vicious cycle* effect will happen. However, if the lawmakers don't consider the revenues adequately, the effect is guaranteed.
Again to prove answer C) as the only correct answer, I put its meaning in the negative above and contrasted the negated situation with conclusion.
@Amit, I hope this clears your doubt.
