When Americans filed their tax returns this year, the United States Tr

OFFICIAL EXPLANATION:

Tax revenues increased 13.4% from the previous year, even though the number of employee tax returns filed stayed almost constant. Many possible explanations exist: an increase in tax revenue collected per person, an increase in tax revenue collected from other sources, such as from businesses or taxes on investments, a misleading increase due to a return to normal levels after a sharp reduction last year, and so on.

(A) CORRECT. This statement does not explain the seemingly contradictory trends. It does not address the change in the revenue at all.

(B) An increase in taxes paid by non-employees on dividends and capital gains would explain how the total tax revenue increased even though the number of employee tax returns filed stayed the same.

(C) If tax revenues were unusually low last year, and then returned to normal levels this year, that would explain how tax revenues could have increased during that time period even though the number of employee tax returns was unchanged.

(D) Rising corporate tax collections could explain rising tax revenue at a time when the number of employee tax returns stayed the same.

(E) Even though the number of employees paying taxes is the same, the fact that the government is collecting more money from them would explain the increase in revenue.

+1A

• During this year, the number of women who re-entered the workforce as employees, after taking time off to raise children, was greater than the number of people who retired from the workforce. (This is our answer as it does not resolve the paradox. This imply that the number of tax payers increased and tax too. What we need to find is a situation wherein tax has increased but the number of employee has not)
• Many retired workers owed more in taxes this year due to an increase in dividends and capital gains on their stock investments. (Resolves the paradox, if they owe more, they will pay more)
• Last year, tax revenues were unusually low because the stock market experienced a marked decline, and many taxpayers reduced their taxable income with capital losses. (Resolves the paradox, On comparative terms, this year’s tax will be higher)
• Compared with previous years, a greater percentage of the total tax revenue this year was collected from small businesses and corporations. (resolves)
• The employees who filed tax returns were paid higher wages this year than they were in the past, and thus owed more to the government in taxes per person. (resolves)

Case: Americans filled their tax returns. Tax revenue increased by 13,4 % . However the number of tax returns filled by employees did not increase.

was stuck between A and D and ended up choosing D

D: the greater revenue might have been from increase in tax amount. so employees can remain same
(wonder how i ended up with this)
A: There is an increase in the no. of employees (this does not resolve the paradox)

I wonder how D can be a plausible answer
It states- a greater % of tax was collected from business..
1.Either the businesses altogether grew
2.Tax rate for businesses increased
3.No of businesses increased

All answer the question sufficiently

well the reasoning is simple : D does open up that window that could explain the simultaneous increase in tax revenue collection and the unchanged number of employee tax returns filed

D says :Compared with previous years, a greater percentage of the total tax revenue this year was collected from small businesses and corporations.---->there by creating a case where the total tax collected has increased while keeping the number of taxpayers unchanged . u could argue that the reverse can also happen in such case .however u have to remember that GMAC CR are not open debate session where we can keep rebutting with "if's" and "but"
remember that in such question the given options may not directly explain everything

i am sure u will agree as why A is the answer .because it is evidently stating that number of taxpayers have increased in number

My gripe with this question is how easy it is to misinterpret it.

The wording of the opening clause can lead the reader into thinkinging the tax revenue in question is the tax revenue collected from employees, so D is logically out of the question as it deals with business tax. However, upon closer examination and NOT Misinterpreting what is being said, I noticed that the clause states "When...." so it deals with a time reference, not the source of tax revenue.

Easy to get confused judging by the stats on this question.

I am confused by this question (and apologies if I missed this explanation) because tax filing and tax collection are two different events in America. Tax collection generally occurs during the current year and tax filing is an event that covers the previous year. In other words, these two events are independent from each other.

How does tax filing impact tax collection when the current tax year isn't complete?