One State

[joyseychow]

One state adds a 7 percent sales tax to the price of most products purchased within its jurisdiction. This tax, therefore, if viewed as tax on income, has the reverse effect of the federal income tax: the lower the income, the higher the annual percentage rate at which the income is taxed.
The conclusion above would be properly drawn if which of the following were assumed as a premise?
(A) The amount of money citizens spend on products subject to the state tax tends to be equal across income levels.
(B) The federal income tax favors citizens with high incomes, whereas the state sales tax favors citizens with low incomes.
(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.
(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.
(E) Citizens who fail to earn federally taxable income are also exempt from the state sales tax.

[gmat_dest]

Conclusion:

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

For the above to be TRUE, A has to be the necessary assumption.

Hence A is the answer.

[mehravikas]

Should be A

[arorag]

Agree with A

[jjk]

A.

[Musicolo]

i dont get why A is the answer

[joyseychow]

Conclusion:

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

For the above to be TRUE, A has to be the necessary assumption.

Hence A is the answer.

Could you pls. explain further? I still don't get it.

[real2008]

C should be the answer

[belize]

I think A is correct. I approach it as a math question.

Conclusion: 7% state tax rate is higher for lower income families.
Premise: Fed tax rate is proportional to income level.
Assumption: low income families and high income families spend equal amount. For instance, if they both spend $100 on a product, the tax is $7.

For low income families who earn $50, $7 is 14%. On the other hand, for high income families who earn $100, $7 is 7%.

It helps validate the conclusion that the state tax is higher for lower income families and vice versa.

[perfectstranger]

therefore, if viewed as tax on income, has the reverse effect of the federal income tax: the lower the income, the higher the annual percentage rate at which the income is taxed.

The conclusion above would be properly drawn if which of the following were assumed as a premise?

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

Bold part is the conclusion : lower income higher tax rate
Premise 1: 7% of sale tax on sales

Assume 100 $ spent for monthly grains 7 $ tax both if monthly income is 500 $ then this makes 1.4% of monthly income. Assume 1000$ is monthly income then this makes 0.07% of monthly income.

If the tax is not equal to everyone then these percentages will be changed may be they will be equal which will violate the conclusion.Thanks Belize for nice explanation.

[joseph32]

I feel the answer will be C