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# Property taxes are typically set at a flat rate per $1,000  Question banks Downloads My Bookmarks Reviews Important topics Author Message TAGS: Senior Manager Joined: 27 May 2009 Posts: 282 Followers: 2 Kudos [?]: 107 [0], given: 18 Property taxes are typically set at a flat rate per$ 1,000 [#permalink]  22 Aug 2009, 06:37
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106. Property taxes are typically set at a flat rate per $1,000 of officially assessed value. Reassessments should be frequent in order to remove distortions that arise when property values change at differential rates. In practice, however, reassessments typically occur when they benefit the government – that is, when their effect is to increase total tax revenue. If the statements above are true, which of the following describes a situation in which a reassessment should occur but is unlikely to do so? (A) Property values have risen sharply and uniformly. (B) Property values have all risen – some very sharply, some less so. (C) Property values have for the most part risen sharply yet some have dropped slightly. (D) Property values have for the most part dropped significantly; yet some have risen slightly. (E) Property values have dropped significantly and uniformly. Pls explain the argument as well as the answer OA: [Reveal] Spoiler: D Senior Manager Joined: 29 Jul 2009 Posts: 314 Followers: 4 Kudos [?]: 219 [2] , given: 9 Re: Property taxes are typically set [#permalink] 22 Aug 2009, 07:36 2 This post received KUDOS IMO the best you can do is to diagram the stimulus property values change at differential rates ---> Reassessments should occur In reality a reassessment has occurred ---> is likely that the reassessment has benefited the government, increasing the total revenue If the statements above are true, which of the following describes a situation in which a reassessment should occur but is unlikely to do so? The key to this problem is to rephrase the question a situation in which a reassessment should occur, the property values should change at different rates. the reassessment is unlikely to do --> the reassessment won't benefit the government ---> the reassessment won't increase the total revenue so you are looking for an answer in which the property values change at different rates but in which they don't increase the total revenue (A) Property values have risen sharply and uniformly. Eliminate this because the rates are not different (B) Property values have all risen – some very sharply, some less so. All the property values have risen, so they have increased the total revenue. out (C) Property values have for the most part risen sharply yet some have dropped slightly. This is results in an increase of the revenue. out (D) Property values have for the most part dropped significantly; yet some have risen slightly. Correct. Different rates and in global the revenue has decreased (E) Property values have dropped significantly and uniformly. not different rates Senior Manager Joined: 17 Mar 2009 Posts: 310 Followers: 6 Kudos [?]: 269 [1] , given: 22 Re: Property taxes are typically set [#permalink] 22 Aug 2009, 07:47 1 This post received KUDOS two statements from the argument stmt1: Reassessments are mad when property values change at differential rates From stmt1, change at differential rates==> increase as well as decrease of property rates stmt2: Reassessments occur when they benefit government to increase total tax revenue From stmt2, to increase total tax revenue, most property values must increase. the question is when reassessment needed but it is not done by government, then it implies most property values decrease. D clearly explains of most property value decreaese and some rise to prove stmt1 that reassessments are needed. A. no differential rates so no reassessments needed B. no differential rates , all have risen C. differential rates are there so one condition is met, but most property values risen , then it would benefit government and reassessment would occur ( for us reassessment should not occur) E. same as A no differential rates so no reassessments needed Senior Manager Joined: 27 May 2009 Posts: 282 Followers: 2 Kudos [?]: 107 [0], given: 18 Re: Property taxes are typically set [#permalink] 22 Aug 2009, 23:34 Thanks Guys.... Got it.. Kudos to both of you Intern Joined: 29 Mar 2013 Posts: 3 Followers: 0 Kudos [?]: 0 [0], given: 2 Re: Property taxes are typically set at a flat rate per$ 1,000 [#permalink]  29 Mar 2013, 05:37
A and E out, cause property values risen and dropped uniformly.

B and C -- in both these cases property values as whole increased. Ideally govt will reassess the taxes so that owners have to pay more. This reassessment is omething Govt will be looking to do, since these scenarios increase the tax revenue to Govt. So both out.

For D -- Explanation is similar to B and C, but in reverse. So Govt will not want to reassess in this scenario, cause it would mean less revenue to Govt.
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Kudos [?]: 0 [0], given: 2

Re: Property taxes are typically set at a flat rate per $1,000 [#permalink] 29 Mar 2013, 05:37 A and E out, cause property values risen and dropped uniformly. B and C -- in both these cases property values as whole increased. Ideally govt will reassess the taxes so that owners have to pay more. This reassessment is omething Govt will be looking to do, since these scenarios increase the tax revenue to Govt. So both out. For D -- Explanation is similar to B and C, but in reverse. So Govt will not want to reassess in this scenario, cause it would mean less revenue to Govt. Current Student Joined: 29 Apr 2013 Posts: 101 Location: India Concentration: General Management, Strategy GMAT Date: 11-06-2013 WE: Programming (Telecommunications) Followers: 2 Kudos [?]: 103 [0], given: 53 Re: Property taxes are typically set at a flat rate per$ 1,000 [#permalink]  30 Sep 2013, 07:41
rohansherry wrote:
Property taxes are typically set at a flat rate per $1,000 of officially assessed value. Reassessments should be frequent in order to remove distortions that arise when property values change at differential rates. In practice, however, reassessments typically occur when they benefit the government – that is, when their effect is to increase total tax revenue. If the statements above are true, which of the following describes a situation in which a reassessment should occur but is unlikely to do so? (A) Property values have risen sharply and uniformly. (B) Property values have all risen – some very sharply, some less so. (C) Property values have for the most part risen sharply yet some have dropped slightly. (D) Property values have for the most part dropped significantly; yet some have risen slightly. (E) Property values have dropped significantly and uniformly. GMAT people posted this question today on their Facebook page. And I marked a wrong answer (E) Actually I couldn't understand the meaning of "differential". So what does "differential" mean here? _________________ Do not forget to hit the Kudos button on your left if you find my post helpful Collection of some good questions on Number System Re: Property taxes are typically set at a flat rate per$ 1,000   [#permalink] 30 Sep 2013, 07:41
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