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Re: According to some people, income tax should be done away with in the [#permalink]
Expert Reply
Bunuel wrote:
According to some people, income tax should be done away with in the US since there are several other ways to collect taxes. A few countries in Europe have successfully abolished income taxes by raising other taxes such as sales tax. Of course this makes products more expensive but with the added amount of money you would receive on your paycheck, you will still be better off than you were paying income taxes.

Which of the following, if true, provides the most support for the argument above?


(A) The prices of products in European countries, when converted into US dollars at current rates are very similar to their prices in the United States.

(B) The increase in prices of products because of the increased sales tax rate will not more than offset the benefit of not paying any income taxes.

(C) The legislative body in the United States has stated that it will support the move to abolish income tax.

(D) Apart from increasing sales tax, the government can also increase other special taxes such as those on petroleum products.

(E) The government has enough funds in reserve currently to be able to absorb any shock because of lowered tax collection.


This is a CR Butler Question



Official Explanation



The argument concludes that the increase in the prices of products because of an increase in the sales tax rate will not adversely affect the consumers because their salaries will also increase due to the abolition of income tax. However, what if this increase in the prices of products was much more than the increase in people’s salary? Then the situation will negatively impact the people. The argument obviously assumes this will not be the case. B states this and so strengthens the argument.

(A) The situation in European countries has no bearing on the situation in the US.
(B) The correct answer.
(C) This is an additional point and not relevant to the reasoning provided in the argument.
(D) Other taxes are outside the purview of the argument.
(E) The question is not whether the government will be able to bear the shock of abolition of income tax but whether such a move will be beneficial for the people.
GMAT Club Bot
Re: According to some people, income tax should be done away with in the [#permalink]
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