Check GMAT Club Decision Tracker for the Latest School Decision Releases https://gmatclub.com/AppTrack

 It is currently 23 May 2017, 19:47

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# 1090;АЬOne state adds a 5 percent sales tax to

Author Message
CEO
Joined: 15 Aug 2003
Posts: 3454
Followers: 67

Kudos [?]: 874 [0], given: 781

### Show Tags

19 Sep 2003, 17:21
00:00

Difficulty:

(N/A)

Question Stats:

0% (00:00) correct 0% (00:00) wrong based on 0 sessions

### HideShow timer Statistics

тАЬOne state adds a 5 percent sales tax to the price of most products bought 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.тАЭ

The conclusion above would be properly drawn if which of the following were assumed as a premise?

1.The amount of money citizens spend on products subject to the state tax tends to be equal across income levels

2. The federal income tax favors citizens with high incomes, whereas the state sales tax favors citizens with low incomes

3. 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

4. The lower a stateтАЩs sales tax, the more it will tend to redistribute income from the more affluent citizens to the rest of the society

5. Citizens who fail to earn federally taxable income are also exempt from the state sales tax
Senior Manager
Joined: 22 Aug 2003
Posts: 257
Location: Bangalore
Followers: 1

Kudos [?]: 13 [0], given: 0

### Show Tags

20 Sep 2003, 06:03
will go with A.
Only if it is assumed that poeple across all income levels will spend the same amont of money on these products, we can conclude that poeple with lower incomes will pay more tax, a situtation that has reverse effect of federal income taxes (where higher the income more the tax).
Sounds like a scary question but little focus helps to see through the argument. good question. hope i am right....
- Vicks
CEO
Joined: 15 Aug 2003
Posts: 3454
Followers: 67

Kudos [?]: 874 [0], given: 781

### Show Tags

20 Sep 2003, 06:43
Vicky wrote:
will go with A.
Only if it is assumed that poeple across all income levels will spend the same amont of money on these products, we can conclude that poeple with lower incomes will pay more tax, a situtation that has reverse effect of federal income taxes (where higher the income more the tax).
Sounds like a scary question but little focus helps to see through the argument. good question. hope i am right....
- Vicks

Senior Manager
Joined: 04 Nov 2006
Posts: 265
Location: California
Followers: 1

Kudos [?]: 206 [0], given: 0

### Show Tags

21 Dec 2006, 01:43
My A...
Director
Joined: 30 Nov 2006
Posts: 591
Location: Kuwait
Followers: 15

Kudos [?]: 290 [0], given: 0

### Show Tags

21 Dec 2006, 01:54
Since sales tax is dependent on product purchase spendings, the effect of sales tax on the income is depenedent on product spendings.

The sales tax effect, the reverse effect of federal income tax, is that higher income --> higher percentage of income that is sales taxed
Logical

Senior Manager
Joined: 08 Jun 2006
Posts: 337
Location: Washington DC
Followers: 1

Kudos [?]: 54 [0], given: 0

### Show Tags

21 Dec 2006, 07:18
A is the winner
Senior Manager
Joined: 24 Oct 2006
Posts: 339
Followers: 1

Kudos [?]: 32 [0], given: 0

### Show Tags

21 Dec 2006, 14:25
I got A too!
21 Dec 2006, 14:25
Similar topics Replies Last post
Similar
Topics:
One state adds a 7 percent sales tax to the price of most 4 11 Jul 2010, 23:16
1 In 1992, 5 percent of every dollar paid in tax went to 10 09 Jun 2011, 05:52
One state adds a 7 percent sales tax to the price of most 8 18 Aug 2009, 02:14
1 CR - Sales Tax 14 13 Jun 2009, 22:14
One state adds a 7 percent sales tax to the price of most 3 06 May 2008, 16:29
Display posts from previous: Sort by