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One state adds a 7 percent sales tax to the price of most

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One state adds a 7 percent sales tax to the price of most [#permalink] New post 18 Jan 2010, 06:10
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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.
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Re: CR - One state adds a 7 percent sales tax [#permalink] New post 18 Jan 2010, 07:47
SudiptoGmat wrote:
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.


IMO B by POE..
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Re: CR - One state adds a 7 percent sales tax [#permalink] New post 18 Jan 2010, 09:45
CN: the lower the income, the higher the annual percentage rate at which the income is taxed

If B is the answer then you are actually opposing the conclusion because if sales tax favor low income group then the percentage on income will also be low not hing.
So, should be rejected at the first look. Answer should be something that says that low income group actually spends more in products (eventually pays more sales tax) compared to their income.
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Re: CR - One state adds a 7 percent sales tax [#permalink] New post 18 Jan 2010, 11:43
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The question asks what assumption should be made for the validity of the passage.

A) In order to draw a conclusion on the relative effect on low and high income earners, one must assume how these two groups spend their money. If low income earners were to spend all their money outside the jurisdiction, while the high income earners were to spend some of it in the jurisdiction, the conclusion made in the statement would be wrong. This statement makes an assumption regarging the spending habits of the two groups, and if it were true, the statement would be true as well. Right answer.

B) The passage actually states the opposite of B, but this is ininfluential, since the comparison between the two types of taxes is the conclusion of the passage, and not an assumption. Wrong answer.

C) The author is not arguing about affordability, but about the fiscal effect of the tax increase on two different earner groups. Wrong answer.

D) No assumption needs to be made regarding income redistribution among earners groups. Wrong answer.

E) If this assumption were true, the passage would be wrong. Wrong answer.

My answer is A
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Re: CR - One state adds a 7 percent sales tax [#permalink] New post 18 Jan 2010, 12:25
OA is A
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Re: CR - One state adds a 7 percent sales tax [#permalink] New post 24 Apr 2010, 04:27
@SudiptoGmat,

You post some of the good questions on CR forum.
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Re: One state adds a 7 percent sales tax to the price of most [#permalink] New post 25 Apr 2012, 02:32
So far i have not done correctly any questions SudiptoGmat posted. Does anybody know the source? Thank you.

Oh i found another similar post here
one-state-adds-a-7-percent-sales-tax-to-the-price-of-most-116378.html?fl=similar
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Re: One state adds a 7 percent sales tax to the price of most [#permalink] New post 19 Feb 2014, 11:45
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Re: One state adds a 7 percent sales tax to the price of most [#permalink] New post 17 Mar 2014, 15:25
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.- nothing about equal income is said here
(B) The federal income tax favors citizens with high incomes, whereas the state sales tax favors citizens with low incomes. - it clearly explains the reason for high income tax on lower earning ppl
(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.- nothing about this is given in argument
(E) Citizens who fail to earn federally taxable income are also exempt from the state sales tax.- this is a wrong assumption
Re: One state adds a 7 percent sales tax to the price of most   [#permalink] 17 Mar 2014, 15:25
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