Urban planner: The mayor of Dismaston supports a new tax cod

This topic has expert replies

GMAT/MBA Expert

User avatar
GMAT Instructor
Posts: 768
Joined: 28 Dec 2011
Location: Berkeley, CA
Thanked: 387 times
Followed by:140 members
Urban planner: The mayor of Dismaston supports a new tax code that would assess local businesses on the property value of their site rather than on their income or profits; the mayor argues that this change will not contribute to any loss in tax revenue for the city. Several city council members disagree, citing similar changes to tax code that were unsuccessful in cities similar to Dismaston. The council members' argument is without merit, though, because property values rise steadily each year, while business incomes fluctuate wildly with the national economy.

Which of the following is an assumption on which the argument depends?

(A) The new tax code would not apply to the significant number of online business associated with the city that have no physical presence on a piece of property in the city.

(B) In previous years, the successes and failures of many previous Dismaston tax codes to generate income have been mirrored by similar tax codes in the the same cities similar to Dismaston in other respects.

(C) A small number of store fronts in the downtown neighborhood are vacant: under the new code, these businesses are likely to owe higher taxes than they have paid, unless some loophole is written into the law.

(D) The annual percentage rise in real estate values in Dismaston has been consistently more than the average annual growth rate percentages across all businesses with properties in Dismaston.

(E) In any year, some unsuccessful businesses will close and other businesses, some quite promising, will open, but total amount of property in the city is fixed and unchanging, providing greater stability.


For the GMAT CR questions, it's crucial to understand assumptions and the Negation Test for them. For a discussion of these issues, as well as the OE of this question, see:
https://magoosh.com/gmat/2016/gmat-criti ... questions/

Mike :-)
Magoosh GMAT Instructor
https://gmat.magoosh.com/