Conclusion: the 7 percent sales tax has the opposite effect of the income tax.

Income tax percentages increase as income increases. If sales tax has the opposite effect, then its effective rate decreases as income increases.

Which answer is required for that to make sense?

A--Correct. Since the sales tax is a flat rate, the amount spent on taxable goods determines its effective rate. If citizens spend the same amount on taxable goods, then the effective rate decreases as income increases. For example:

Each citizen spends $1000 on taxable goods. At 7 percent, each citizen pays $70 in sales tax. If person A makes $2,000, then that $70 is 3.5 percent of their income. If person B makes $4,000, then that $70 is 1.75 percent of their income.

B--Irrelevant. We aren't looking at favoritism in tax rates.

C--Irrelevant. The argument is simply about the effect of sales tax.

D--Irrelevant. There is nothing about income redistribution.

E--This may contradict the argument.

IMO is A.


The technique is to isolate the conclusion first and then directly see if the assumption is necessary for the conclusion or not. Here the conclusion is,

the lower the income, the higher the annual percentage rate at which the income is taxed.

Now let's look at the ans choices.

(A) The amount of money citizens spend on products subject to the state tax tends to be equal across income levels.

If this condition doesn't hold then we can not say what effect it has on citizens with different salaries. It might be the case that citizen with higher salaries have higher sales tax. In that condition conclusion doesn't hold true. Hence this answer choice is CORRECT.

(B) The federal income tax favors citizens with high incomes, whereas the state sales tax favors citizens with low incomes. WRONG.

This statement is not necessary for the conclusion to be drawn. This is an example of scope shift. The conclusion is not about what favours what ?

(C) Citizens with low annual incomes can afford to pay a relatively higher percentage of their incomes in state sales tax, since their federal income tax is relatively low.

Again a scope shift. The argument is not about affordability. WRONG.

(D) The lower a state's sales tax, the more it will tend to redistribute income from the more affluent citizens to the rest of society.

Generalization is not what is intended here. WRONG.

(E) Citizens who fail to earn federally taxable income are also exempt from the state sales tax.

Out of scope. WRONG.


This question seems relatively easy. as other choices seem to be out of scope. [/i]

+1 for A