Tax evasion : GMAT Critical Reasoning (CR)
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# Tax evasion

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28 Apr 2011, 07:10
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Difficulty:

45% (medium)

Question Stats:

67% (02:21) correct 33% (02:22) wrong based on 154 sessions

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[Reveal] Spoiler: OA

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28 Apr 2011, 09:05
I must say this was a close call between C and D.
Both these options introduce a new reason as an assumption. Options A,B and E can be POE'd.
However, option D if you negate the statement then it actually supports the argument.As, lowering tax rates and putting fine won't deter the evaders.Thus the increase in tax rates by the law maker. Hence POE.

In option C, using negation there won't be a necessity for the lawmakers to increase the tax rates,if they had planned for the revenue lost.Hence, the argument falls apart. Thus it is the OA.

Good question indeed.
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28 Apr 2011, 09:22
I thought C made more sense to set things up, but D was really really close on its heels as a corollary. The assumption to C makes the situation inevitable, but there must be a core of evaders who will never comply unless otherwise forced / induced.

Great question.
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28 Apr 2011, 09:48
I agree with you on your reasoning behind choice "C"..but I do not concur with the explanation for elimination of choice "D"..

Question stem is like this if not A(the answer choice) then not B(the vicious cycle).

Choice "D" states that unless the low tax rates are reinforced with the hefty fines for the evasion, the tax evasion is bound to occur.This choice is vague.Now if this statement were true then the so called vicious cycle will not occur.
If A(the answer choice) then not B(The vicious cycle) Thus choice "D" is out!

Choice "C" states that Lawmakers do not account for the lost revenue through evasion.This statement must be true because if lawmakers would have accounted for the lost revenue then they won't have increased the interest rates.
If not A(the answer choice) then not B(the vicious cycle)

Which makes "C" the best among all choices.

amit2k9 wrote:
I must say this was a close call between C and D.
Both these options introduce a new reason as an assumption. Options A,B and E can be POE'd.
However, option D if you negate the statement then it actually supports the argument.As, lowering tax rates and putting fine won't deter the evaders.Thus the increase in tax rates by the law maker. Hence POE.

In option C, using negation there won't be a necessity for the lawmakers to increase the tax rates,if they had planned for the revenue lost.Hence, the argument falls apart. Thus it is the OA.

Good question indeed.

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29 Apr 2011, 00:19
The answer is C, by negation technique.
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30 Apr 2011, 00:03
'Choice "D" states that unless the low tax rates are reinforced with the hefty fines for the evasion, the tax evasion is bound to occur.This choice is vague.Now if this statement were true then the so called vicious cycle will not occur.
If A(the answer choice) then not B(The vicious cycle) Thus choice "D" is out!'

agreed on the reason you eliminated D , the purpose is to kill the vicious cycle , and the passage is not about lowering of taxes as a method , it is out of context.the shell game this one.
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30 Jan 2015, 22:15
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30 Jan 2015, 23:26
Hi All,

This CR prompt describes a circular/repeating cycle that occurs when people evade paying taxes…

1) People avoid paying income taxes
2) Lawmakers are FORCED to raise income taxes
3) The tax burden becomes worse for people who actually pay tax, so….we end up back at Step 1….

1) More people avoid paying income taxes
Etc.

We're essentially asked to define WHY this cycle happens. When reading the prompt, I focused on the word "forced" - why EXACTLY would lawmakers be FORCED to raise taxes if some people didn't pay??? There must be some "need" for that money; when the lawmakers don't get what they need, then they have to raise taxes to try to get what they need. We're looking for an answer that addresses this issue (and likely points out something faulty in the lawmakers plan that causes the problem to occur).

[Reveal] Spoiler:
C
gives us exactly what we're looking for. The root "cause" of the cycle and the reason why it occurs.

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Re: Tax evasion   [#permalink] 30 Jan 2015, 23:26
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