Kaplan CR

[gmatmachoman]

Between 1977 and 1989, the percentage of income paid to Federal taxes by the richest one percent of Americans decreased, from 40 percent to 25 percent. By the end of that same period, however, the richest one percent of Americans were paying a larger proportion of all Federal tax revenues, from 12.7 percent in 1977 to 16.2 percent in 1989.

Which of the following, if true, contributes most to an explanation of the discrepancy described above?

A.Between 1977 and 1989, the Internal Revenue Service increased the percentage of its staff members responsible for audits and tax collection.

B.Between 1977 and 1989, the before-tax income of the richest one percent of Americans increased by over 75 percent when adjusted for inflation.

C.Between 1977 and 1989, many of the richest one percent of Americans shifted their investments from untaxable to taxable assets.

D.Between 1977 and 1989, the top tax rate was reduced from 70 percent to 31 percent and several tax loopholes were eliminated.

E.Between 1977 and 1989, the amount of Federal taxes paid by the richest one percent of Americans increased by $45 billion, while the amount paid by all Americans rose by $50 billion.

OA :After few discussions

[sars72]

Between 1977 and 1989, the percentage of income paid to Federal taxes by the richest one percent of Americans decreased, from 40 percent to 25 percent. By the end of that same period, however, the richest one percent of Americans were paying a larger proportion of all Federal tax revenues, from 12.7 percent in 1977 to 16.2 percent in 1989.

Which of the following, if true, contributes most to an explanation of the discrepancy described above?

A.Between 1977 and 1989, the Internal Revenue Service increased the percentage of its staff members responsible for audits and tax collection.

Increased staff members. Nothing to do with taxes paid. Rejected!

B.Between 1977 and 1989, the before-tax income of the richest one percent of Americans increased by over 75 percent when adjusted for inflation.

Taxable income increased, so this could explain the 40% to 25% drop. Since their total income increased, the percentage of it that they were paying to taxes could decrease. Possible answer. Leave for later.

C.Between 1977 and 1989, many of the richest one percent of Americans shifted their investments from untaxable to taxable assets.

Eh? This means that they would have paid more taxes. Messes up the whole thing. Rejected!

D.Between 1977 and 1989, the top tax rate was reduced from 70 percent to 31 percent and several tax loopholes were eliminated.

This means that people would have paid more taxes. This doesn't explain the 40% to 20% drop in taxed income of richest 1%. Eliminated!

E.Between 1977 and 1989, the amount of Federal taxes paid by the richest one percent of Americans increased by $45 billion, while the amount paid by all Americans rose by $50 billion.

This gives us absolute amounts. The premise had only percentages. We cannot mix and match. So this doesn't help us in any way. Eliminated.


So, only left with choice B. Is this the answer?

[gmatmachoman]

I kindly request you to use "spoilers" while posting ur answers. Edit ur post above.

OA : B