A proposed change to federal income tax laws would eliminate deduction

The idea is that if wealthy individuals are no longer permitted to deduct donations from their taxes, then "many charitable and educational institutions would have to reduce services." This rests on the assumption that without the tax incentives, the wealthy individuals will not donate as much (choice A). As a result, those institutions would have less money and have to reduce services.

In order to draw the conclusion, wealthy individuals do not have to be the ONLY source of funding for those institutions. Even if donations from wealth individuals account for, say, half of the funding, if those donations are significantly reduced, the institutions would lose a lot of money. Thus, choice (B) can be eliminated.

Choice (D) can be eliminated for the same reason. Wealthy individuals do not have to be the ONLY individuals who make donations. Regardless, if the donations from just the wealthy individuals are reduced, the institutions would lose money and have to reduce services.

Choice (A) is the best answer.
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A proposed change to federal income tax laws would eliminate deductions from
taxable income for donations a taxpayer has made to charitable and
educational institutions. If this change were adopted, wealthy individuals
would no longer be permitted such deductions. Therefore, many charitable
and educational institutions would have to reduce services, and some would
have to close their doors.

The argument above assumes which of the following?

(A) Without the incentives offered by federal income tax laws, at least some
wealthy individuals would not donate as much money to charitable and
educational institutions as they otherwise would have.
(B) Money contributed by individuals who make their donations because of
provisions in the federal tax laws provides the only source of funding for
many charitable and educational institutions. - In such case many would have closed doors. But my argument does'nt say that.
(C) The primary reason for not adopting the proposed change in the federal
income tax laws cited above is to protect wealthy individuals from having to
pay higher taxes.
(D) Wealthy individuals who donate money to charitable and educational
institutions are the only individuals who donate money to such institutions.
(E) Income tax laws should be changed to make donations to charitable and
educational institutions the only permissible deductions from taxable
income.

OA is A.
This is an OG 10 question.
OE:

The passage argues that charitable and educational institutions, part of whose income comes from donations,
would be negatively affected if wealthy individuals could not count such donations as deductions from their
income. The question asks you to identify an assumption of the argument-that is, something that has to be true
in order for the evidence presented to establish the conclusion.
Choice A is the best answer, since if this statement is false, all wealthy individuals would, even without the
incentive provided by federal tax laws, donate as much money as they do now. In that case, the evidence used
in the argument provides no support for the conclusion.
Choice B is not assumed: the argument need only assume that many institutions depend heavily, but not
necessarily exclusively, on donations from such individuals. Choice C is incorrect given that the argument is
concerned only with the consequences of the proposed change and makes no assumption about any reasons
for making or not making the change. Choice D is not assumed: as far as the argument is concerned, there can
be many other individuals who donate money to the institutions. Choice E is incorrect since the argument, being
about the consequences of the particular proposed change, does not make any assumption about what
alternative changes to the tax laws ought to be made.

My answer is A.
It is relatively easy to eliminate all the others except A and D.

It's not D because you don't need to assume that ONLY wealthy individuals donate to charities. It is safe to assume that "some" wealthy individuals donate to charities. If those stop donating then some charities would have to reduce their service or even close their doors if they depend too much on wealthy individuals.

Simply put, D is too safe an assumption.

A too

The conclusion assumed that rich people only donate because they get the tax break.

Many charitable and educational institutions would be forced to reduce services and even shutdown only when they do not have enough money.
According to the passage, these institutions will close if the proposed change takes effect which means the only source of their finance should be the "money contributed by individuals who make their donations because of provisions in the federal tax laws". The conclusion is based on this assumption. So, the answer is B.

I was pondering... and yes, what you said is very true. I didn't get the subtlety at first, but reading two choices carefully, they're indeed different

A) shows the relationship between tax break and donation
D) simply indicates that the rich donates (may be affected by the tax break or not, who knows?)

Thx, gmatnub, and everyone who replied

BTW, OA is A

I went for B as well, but after a second look seems too extreme.

Any comments?

Cheers

(B) Money contributed by individuals who make their donations because of provisions in the federal tax laws provides the only source of funding for many charitable and educational institutions.

Yes. B looks little extreme as it mentioned 'The federal tax laws provides the only source of funding''

Any more takers why B is incorrect?
Could it have been the answer if in the stimulus it were given that the charitable institutions and educational institutions would have to "close their doors" rather than "reduce their services, and some would have to close their doors"?
Is "reduce their services" implying that the institutions are still getting some money, though in small amount from others?

Hi Marcab,

The key word is as has been pointed out 'only'.

In your example I don't think B would be good either. Even if it was that the charities had to stop functioning, that doesn't mean that the tax relief donors were the only ones. For example if they had made up 99% of the donations, and that were to be taken away the charities would probably still have to stop functioning, yet the 1% of other donors would mean that the tax relief donors were not the 'only' donors.

Hope that helps.

james

Hii James.
Mathematically speaking, If I say that there is a trust called xyz. It is financially supported by donors, who pay 90% of the donated amount.
Consider the entire amount $100,000. If 90% of the amount comes from the donors, then only $10K remains since the wealthy donors no more donate.
With this $10K, the charitable trust has to reduce its services.

Now my question is that since the wealthy donors are the only ones who donate, then there is no provision for 90%-10%. Only share that remains will be either 100% or 0%.
In that case, won't the trust be closed? Given the fact the trust will only be closed rather than "closed or reduce its services"?
Thanks in advance.

Hi Marcab,

My theory was that even if a charity only has 10% of its former donations 'closing the doors' might be necessary anyway. As with 10% they can't even perform the basic services.

Whether you agree with this idea or not, I still think it puts an element of doubt into 'B' which makes the word 'only' difficult.

well that depends on the services the trust offers.
Anyways not going to dive too much in this, will keep my cerebellum intact for quant.
Thanks a ton.

Hi Marcab

Lets say if we have to get inference of the argument instead of Assumption of argument?

Then even in that case - I believe (A) would be correct .Agree?

You can't infer in assumption question.
Inference is the context that has been explicitly stated in the stimulus whereas assumption is the context that helps us to jump from premise to conclusion.

B and D also base on the assumptions that without the incentive, some wealthy people won't donate as much as they would otherwise. So A is the prime assumptions.

I chose B wrongly. But B is wrong not for the word ONLY. B also relies on A as the assumption.

This is a good 'assumption question'

The OA posted for this question is certainly wrong. I have been monitoring the questions posted by soniedarshan, and it seems that there is a pattern in revealing the OA. Last all topics have OA as D. I have checked the OA's on other forums and the OA's do not match. Please refrain from posting OA if you are not sure.

this seems to be a tricky one..even i went for D

in my opinion d only explanation i could find for A being the answer is..

As the conclusion says:Therefore, many charitable and educational institutions would have to reduce services, and some would have to close their doors.

D says: Wealthy individuals who donate money to charitable and educational institutions are the only individuals who donate money to such institutions.

That means if Wealthy individuals are the only people doing charity.. then all institutions will have to shut down.

But as the conclusion says only some institutions will close down.

I tried use negation rule on A..
Without the incentives offered by federal income tax laws, at least some wealthy individuals would donate as much money to charitable and educational institutions as they otherwise would have.

i.e even if there are no incentives provided by govt. wealthy people will do charity.Thus it means that the institutions will not have to shut down.This goes against the conclusion.

The thing is, if we use negation rule on D ,the conclusion is not weakened.. I guess soniedarshan might also made the same mistake. but he has edited the OA, i guess. And I think people might have seen questions posted by soniedarshan that have OA as D. I checked all his questions on other forums and they are all fine. People should stop making such conclusions without any evidence.

I went for B.

According to MGMAT CR the core structure of the argument should be Premise->Intermediate Conclusion->Conclusion.
If the last sentence is the conclusion then A becomes out of scope as it supports the Intermediate Conclusion while B would support the main conclusion.

I am not quite sure about A being the OA, but if GMAT says so I ain't no Shakespeare to revolt it..