Tax!

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gmat_perfect: Legendary Member; Posts: 1083; Joined: Wed Feb 24, 2010 9:38 pmFollowed by: 14 members; Thanked: 127 times

by gmat_perfect » Sat Oct 16, 2010 12:08 am

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.

OA: E

I have thought:

Since a federal government MUST cover more areas to publicize the news, state will have some advantage due to its smaller area. I think that A is correct answer. What is the exact deal?

Thanks.

Source: Beat The GMAT — Critical Reasoning | Sat Oct 16, 2010 12:08 am

neerajkumar1_1: Master | Next Rank: 500 Posts; Posts: 270; Joined: Wed Apr 07, 2010 9:00 amFollowed by: 2 members; Thanked: 24 times

by neerajkumar1_1 » Sat Oct 16, 2010 12:41 am

conclusion: state govns will collect more than federal govn..
assumption: there must be some attribute diff bet fed govn and state govn that one will be successful...

A: irrelevant..
further to clear ur doubt...
Tax amnesty programs are only successful if they are widely publicized.
so if fed govn widely publicizes the tax program, it should earn more...

B: strengthens..
C: the statements say that no penalties... so this fact will not make a difference..
D: irrelevant...
E: Perfect: this says that people dont want to pay federal taxes...
and that people who have not yet paid for state taxes, want to pay but forgot...
so obviously when implemented at state level, people will eventually pay and collect more than federal govn...

Hope this helps!!

niksworth: Legendary Member; Posts: 520; Joined: Mon Jun 14, 2010 10:44 amFollowed by: 6 members; Thanked: 70 times

by niksworth » Sat Oct 16, 2010 6:12 am

gmat_perfect wrote: I have thought:

Since a federal government MUST cover more areas to publicize the news, state will have some advantage due to its smaller area. I think that A is correct answer. What is the exact deal?

Thanks.

You cannot do that. You are assuming that the federal government cannot publicize widely, because it has a wider area to cover. No information in the argument supports this assumption. We cannot bring in outside assumptions / knowledge to solve a CR problem. A cannot be right.

E is a sound choice.

E says that most state taxpayers don't pay because of oversight while most federal taxpayers don't pay because of a conscious decision to not do so. So, an incentive program is more likely to help those who forgot in the first place. So, this program will be more successful at the state level than at the federal level.

scio me nihil scire

rooster: Senior | Next Rank: 100 Posts; Posts: 44; Joined: Wed Aug 25, 2010 12:23 am; Thanked: 6 times

by rooster » Sat Oct 16, 2010 6:50 am

gmat_perfect 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.

OA: E

I have thought:

Since a federal government MUST cover more areas to publicize the news, state will have some advantage due to its smaller area. I think that A is correct answer. What is the exact deal?

Thanks.

E is the sound choice bc it makes sense: federal tax delinquents and state tax delinquents do not pay for different reasons.

niksworth also brings a good point, in order for A to work, we still need to make the assumption that it is harder to widely publicize the two. In regard to the definition of "widely publicize" wouldn't a federal tax initiative be more widely publicized than something that is only done across a state? E is the right choice because it's more straight forward IMO.

this_time_i_will: Master | Next Rank: 500 Posts; Posts: 268; Joined: Wed Mar 17, 2010 2:32 am; Thanked: 17 times

by this_time_i_will » Sat Oct 16, 2010 9:56 am

Further to the above explanations, don't you think that the use of word only makes the option too extreme.

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