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# In order to raise revenue, the federal government planned a

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In order to raise revenue, the federal government planned a [#permalink]

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04 May 2008, 11:22
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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.
[Reveal] Spoiler: OA
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Re: CR - tax amnesty [#permalink]

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08 May 2008, 09:03
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sondenso wrote:
E too,

I am really bad at this kind of question! Now my rule only is reading choice and eliminate according to the feeling. I know this skills risky. Do you have any tips?

Fist break out the premises and conclusion

Premise:
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.

Conclusion:
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?

So we want to strengthen the argument that if the federal governemnt implements the same program they will collect lower taxes than what the state government did.

So before looking at the questions think for a second what you need. The answer should show why people would pay back more state taxes then they would federal taxes.

If you alread have this in mind before looking at the answers then you wont get distracted easily.

A. Tax amnesty programs are only successful if they are widely publicized.

Does this give a reason why people would pay back state tax but not federal tax? No, so move on.

B. Most people who honestly pay their state tax are equally honest in paying their
federal tax.

This addresses people paying state and federal tax but it argues the opposite and weakens.

C. Although federal tax delinquents usually must pay high financial penalties, the
states require far lower financial penalties.

The fees will be abolished so this is irrelevant.

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.

Doesn't address why people would pay more of one over the other.

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.

Bingo! The people who do not pay their state tax do so because they forget not because they were unwilling. These peopel would surely pay once they are reminded and given the opportunity to do it penalty free. It also implies that dont pay federal tax do so because they intentionally dont want to. These people are far less likely to repay once penalties are removed because they didn't want to pay in the first place when there were no penalties.

If you already have an ideal of what your looking for it is easier to spot in a crowd than if you just go through them one by one and decide if they make sense or not.
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Re: In order to raise revenue, the federal government planned a [#permalink]

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05 Dec 2012, 03:51
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Hi Milan & Tomas,

Answer C is not correct in my opinion because as previously stated the fees are being abolished. The question of whether there are more or less state/federal avoiders is in my opinion just speculation.

Answer E does strengthen, because whilst Milan may have a point that SOME State avoiders will forget again, overall it is more likely that becuase people have decided consciously to break the law that they will keep that same opinion even when faced with an amnesty. If people have forgotten, they're likely to be happy with the route out of their dilemma (because they normally want/are happy to pay tax).

Hope that helps.

James
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Re: CR - tax amnesty [#permalink]

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04 May 2008, 11:43
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saravalli 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.

E
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Re: CR - tax amnesty [#permalink]

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04 May 2008, 11:55
i think E as well
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Re: CR - tax amnesty [#permalink]

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07 May 2008, 21:17
OA?
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Re: CR - tax amnesty [#permalink]

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07 May 2008, 22:55
E too,

I am really bad at this kind of question! Now my rule only is reading choice and eliminate according to the feeling. I know this skills risky. Do you have any tips?
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Re: CR - tax amnesty [#permalink]

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08 May 2008, 05:35
OA: E Thanks
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08 May 2008, 17:54
I choose E.
Good question.

The choices narrow down to C or E.
But C talks about federal tax penalty while the premise states that the proposal will not impose penalty.
E states that people do not wish to pay federal tax irrespective of the incentive offered.
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Re: In order to raise revenue, the federal government planned a [#permalink]

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04 Oct 2012, 06:35
According to me all answers were wrong including E. Because if state tax delinquents have forgot to pay the previous taxes, there may be high possibility that again they will forget.

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04 Dec 2012, 13:39
I have C for this one.

C--> Less penalties in the states implies more deliquents meaning more people to give amnesty

D--> As stated above, can be wrong if the deliquencies due to oversight can be lessened with the amnesty program.

Any thoughts?
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Re: In order to raise revenue, the federal government planned a [#permalink]

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18 Aug 2013, 09:26
mymba99 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.

I would go with C... see the catch is in conclusion.."that the federal government would collect a far lower percentage
of total tax owed by delinquents
than did state governments implementing similar
programs."

Its about percentage of owed tax..lets say I owe 1000$as tax and 1000$ as federal penalty-- it makes me me paying 50% of my owed tax
In case of State tax--tax is 1000$and state penalty- 500%...it have to pay 66% of my owed tax. Hope this helps. Manager Status: Persevering Joined: 15 May 2013 Posts: 225 Location: India Concentration: Technology, Leadership GMAT Date: 08-02-2013 GPA: 3.7 WE: Consulting (Consulting) Followers: 1 Kudos [?]: 86 [0], given: 34 Re: In order to raise revenue, the federal government planned a [#permalink] ### Show Tags 19 Aug 2013, 02:29 rbansal6 wrote: mymba99 wrote: In order to raise revenue, the federal government planned a tax amnesty program that allows tax delinquents to pay all owed tax without added financial penalty. However, economists projected that the federal government would collect a far lower percentage of total tax owed by delinquents than did state governments implementing similar programs. Which of the following, if true, would most contribute to an explanation of the economists’ projections? A. Tax amnesty programs are only successful if they are widely publicized. B. Most people who honestly pay their state tax are equally honest in paying their federal tax. C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties. D. The state tax rate varies considerably from state to state, but the federal tax is levied according to laws which apply to citizens of all the states. E. Unlike most federal tax delinquents, most state tax delinquents fail to pay state tax because of an oversight rather than a decision not to pay. I would go with C... see the catch is in conclusion.."that the federal government would collect a far lower percentage of total tax owed by delinquents than did state governments implementing similar programs." Its about percentage of owed tax..lets say I owe 1000$ as tax and 1000$as federal penalty-- it makes me me paying 50% of my owed tax In case of State tax--tax is 1000$ and state penalty- 500%...it have to pay 66% of my owed tax.

Hope this helps.

No C does not say that; On the contrary, it implies that as fines are lower for late payment of state tax,more people will pay federal tax which has higher fines.

OA must be E; As it implies that most unlike state tax delinquents, federal tax delinquents choose not to pay taxes.
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Re: In order to raise revenue, the federal government planned a [#permalink]

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23 Aug 2013, 08:36
rbansal6 wrote:
mymba99 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.

I would go with C... see the catch is in conclusion.."that the federal government would collect a far lower percentage
of total tax owed by delinquents
than did state governments implementing similar
programs."

Its about percentage of owed tax..lets say I owe 1000$as tax and 1000$ as federal penalty-- it makes me me paying 50% of my owed tax
In case of State tax--tax is 1000$and state penalty- 500%...it have to pay 66% of my owed tax. Hope this helps. Hi, In option C, high financial penalties and low financial penalties are stated.However, the argument clearly mentions that in order to increase revenues, a tax amnesty program includes tax without added financial penalty. So, there would be no financial penalty. So if federal give no financial penalty and states gives low financial penalty, people would prefer federal governments.. So, option C is wrong. I don't understand why option D is incorrect and Option E correct. In option E, We don't know the no. of federal tax delinquents fail to pay federal tax compared with the no . of state tax delinquents who fail to pay because of an oversight rather than a decision not to pay. Can someone explain why option D is incorrect and option E the correct answer?? Thanks, Jai _________________ MODULUS Concept ---> http://gmatclub.com/forum/inequalities-158054.html#p1257636 HEXAGON Theory ---> http://gmatclub.com/forum/hexagon-theory-tips-to-solve-any-heaxgon-question-158189.html#p1258308 Manager Status: Persevering Joined: 15 May 2013 Posts: 225 Location: India Concentration: Technology, Leadership GMAT Date: 08-02-2013 GPA: 3.7 WE: Consulting (Consulting) Followers: 1 Kudos [?]: 86 [0], given: 34 Re: In order to raise revenue, the federal government planned a [#permalink] ### Show Tags 23 Aug 2013, 09:11 jaituteja wrote: rbansal6 wrote: mymba99 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. I would go with C... see the catch is in conclusion.."that the federal government would collect a far lower percentage of total tax owed by delinquents than did state governments implementing similar programs." Its about percentage of owed tax..lets say I owe 1000$ as tax and 1000$as federal penalty-- it makes me me paying 50% of my owed tax In case of State tax--tax is 1000$ and state penalty- 500%...it have to pay 66% of my owed tax.

Hope this helps.

Hi,

In option C, high financial penalties and low financial penalties are stated.However, the argument clearly mentions that in order to increase revenues,
a tax amnesty program includes tax without added financial penalty.

So, there would be no financial penalty.
So if federal give no financial penalty and states gives low financial penalty, people would prefer federal governments..

So, option C is wrong.

I don't understand why option D is incorrect and Option E correct.

In option E,
We don't know the no. of federal tax delinquents fail to pay federal tax compared with the no . of state tax delinquents who fail to pay because of an oversight rather than a decision not to pay.

Can someone explain why option D is incorrect and option E the correct answer??

Thanks,
Jai

Hi,

It is clearly given "most delinquents" and the argument concludes lower percentage , so the number of tax delinquents is irrelevant here.

Regards,
Ramandeep
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Re: In order to raise revenue, the federal government planned a [#permalink]

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08 Feb 2014, 15:26
Initial reasoning: The federal government will employ a tax amnesty program that is similar to state government's tax amnesty program. It is expected that the federal government would not collect any higher percentage than the state government did. Thus, if the federal program is similar to the state program, then what is the difference between those who are willing to pay delinquent taxes for the state and those who are not willing to pay delinquent taxes for the federal government? The correct answer choice establishes a distinction, whereas the wrong answer choice does not distinguish anything among them.

A. Tax amnesty programs are only successful if they are widely publicized. Out of scope. This choice also doesn't make a distinction between the federal program and the state program.

B. Most people who honestly pay their state tax are equally honest in paying their federal tax. Out of scope. The correct answer depends upon those who don't pay their state taxes or those who don't pay their federal taxes.

C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties. Shell game. This answer choices supports a different conclusion, but this one is trap because it contains similar word choice as the stimulus.

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. Out of scope. The difference among states doesn't matter, but the difference between the state program and the federal program.

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. Correct

IMO E
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Re: In order to raise revenue, the federal government planned a [#permalink]

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08 Feb 2014, 23:32
PLUMBER250

MY QUESTION -- WHY IS "D" WRONG ?

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.....WE NEED TO KNOW IF THERE IS SOME DIFFERENCE IN THE TWO TAXATIONS WHICH LED TO SOME BEING RESPONDED TO AND SOME TO LESSER EXTENT......MAY BE THE FEDERAL TAX RATE IS MUCH HIGHER THAN THAT OF SOME STATES TAXATION, HENCE PEOPLE - THOUGH RECIPROCATE TO THE STATE TAX DO NOT DO SO FOR THE FEDERAL TAXES.....

THANKX.....
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Re: In order to raise revenue, the federal government planned a [#permalink]

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09 Feb 2014, 07:22
semwal wrote:
PLUMBER250

MY QUESTION -- WHY IS "D" WRONG ?

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.....WE NEED TO KNOW IF THERE IS SOME DIFFERENCE IN THE TWO TAXATIONS WHICH LED TO SOME BEING RESPONDED TO AND SOME TO LESSER EXTENT......MAY BE THE FEDERAL TAX RATE IS MUCH HIGHER THAN THAT OF SOME STATES TAXATION, HENCE PEOPLE - THOUGH RECIPROCATE TO THE STATE TAX DO NOT DO SO FOR THE FEDERAL TAXES.....

THANKX.....

D is go far away because as you said, ..MAY BE THE FEDERAL TAX RATE IS MUCH HIGHER THAN THAT OF SOME STATES TAXATION. What if the situation looks like this:

the tax rate of the state is A 60% B 20% C 80% D 30% (ave 47.5%) and the tax rate of the federal is 40%.

Yeah this is the opposite of your premise, but this one surely weaken your statement.

Besides, THE POINT HERE is NOT about the tax rate, you can't assume that the higher the tax rate, the lower percentage of people to pay the tax. In the stem we can't see this assumption.

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.

While E explain or narrow the problem.Using comparison to state that the reason why people in STATE do not pay tax:OVERSIGHT, i,e, they are more likely to pay because they are not mean to delinquent.
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Re: In order to raise revenue, the federal government planned a [#permalink]

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01 Mar 2015, 05:50
mymba99 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.

Guys, please help me understand why D is wrong. Option D states that STATE tax varies while the FEDERAL tax is uniform across states. The conclusion of the the para is STATE tax collection will be higher that FEDERAL tax collection. With option D, one can assume that though the tax varies according to states, the average collection can be higher than collected from the uniform rate of FEDERAL tax. Hence the assumption explains the conclusion.
Option E states that an oversight can be the reason behind delinquency of STATE tax while a bad intention behind FEDERAL tax. I understand the objective of the program is to attract such unwilling citizens as zero penalty would encourage them to make the payment.
The reasoning I have read so far behind option E is that people who haven't paid FEDERAL tax would continue to deny payment. I presume the country would anyway go behind those delinquents so they have no choice but to make the payment. I'm unable to imagine how they will escape from the payment as assumed in the reasoning.
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Re: In order to raise revenue, the federal government planned a [#permalink]

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27 Jan 2016, 10:15
Hi,

I do not understand why E is right. A tax amnesty is a period where taxable people can legalize tax debts. Why should we care about the reason why taxable people did not pay (oversight or not the decision to pay)? There is nowhere told that the aim of the amnesty is to avoid reincidence.

Is E right because delinquents in this state will not care about the amnesty. Hence, the conclusion is strengthened by saying the project will have no effect?

Thanks
Re: In order to raise revenue, the federal government planned a   [#permalink] 27 Jan 2016, 10:15

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