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According to the Department of Social Services, new taxes need to be

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According to the Department of Social Services, new taxes need to be  [#permalink]

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New post Updated on: 05 Nov 2018, 04:33
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  65% (hard)

Question Stats:

66% (01:36) correct 34% (01:45) wrong based on 529 sessions

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According to the Department of Social Services, new taxes need to be generated to maintain the solvency of the state's Medical Aid program, which provides medical coverage for the state's poor and uninsured residents. The governor has proposed that a special tax be imposed on those with incomes greater than $300,000 a year to pay for the shortfalls in the Medical Aid program. While new revenues are indeed needed to maintain the Medical Aid program's solvency, the governor's plan for securing the needed funds should be rejected because it would force certain taxpayers to absorb the cost for something from which they would receive no benefit.

Which of the following, if true, would cast the most doubt on the feasibility of the governor's plan to maintain the solvency of the state's Medical Aid program?


A. Before any such tax increase can be imposed, the state is required by law to hold hearings at which objections to the proposed tax hike can be raised.

B. Imposing a special tax will fail to address the underlying causes for the increasing costs to maintain the state's Medical Aid program or the increasing number of uninsured residents in the state.

C. In recent years, changes to the Medical Aid funding formula have shifted much of the burden for maintaining the program from the federal government to state governments.

D. Those with incomes greater than $300,000 a year represent a powerful political constituency in the state and previous attempts to impose tax increases on this group have been blocked by the state legislature.

E. Other states that have tried to impose similar targeted tax increases to maintain the solvency of their Medical Aid programs have met with mixed success.

Originally posted by nave on 28 Apr 2013, 22:29.
Last edited by Bunuel on 05 Nov 2018, 04:33, edited 1 time in total.
Renamed the topic and edited the question.
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Re: According to the Department of Social Services, new taxes need to be  [#permalink]

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New post Updated on: 28 Apr 2013, 23:48
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nave81 wrote:
According to the Department of Social Services, new taxes need to be generated to maintain the solvency of the state's Medical Aid program, which provides medical coverage for the state's poor and uninsured residents. The governor has proposed that a special tax be imposed on those with incomes greater than $300,000 a year to pay for the shortfalls in the Medical Aid program. While new revenues are indeed needed to maintain the Medical Aid program's solvency, the governor's plan for securing the needed funds should be rejected because it would force certain taxpayers to absorb the cost for something from which they would receive no benefit.

Which of the following, if true, would cast the most doubt on the feasibility of the governor's plan to maintain the solvency of the state's Medical Aid program?


Weaken the argument. Which of the below would hamper (not only influence) the feasibility of governor's plan?
Quote:
A. Before any such tax increase can be imposed, the state is required by law to hold hearings at which objections to the proposed tax hike can be raised.

The objections can be raised, but not necessarily will be. A) informs us only about the formal procedure, but suggests no objections to the plan.
Quote:
B. Imposing a special tax will fail to address the underlying causes for the increasing costs to maintain the state's Medical Aid program or the increasing number of uninsured residents in the state.

Adressing the underlying causes is not the issue in question. This is out of scope.
Quote:
C. In recent years, changes to the Medical Aid funding formula have shifted much of the burden for maintaining the program from the federal government to state governments.

It is irrelevant, who is burdened with the funding. Out of scope.
Quote:
D. Those with incomes greater than $300,000 a year represent a powerful political constituency in the state and previous attempts to impose tax increases on this group have been blocked by the state legislature.

Those with incomes greater than $300,000 a year are subject to the plan. If the plan is against their interest, and if they are capable of thwarting the plan, they logically will defend their own interest by thwarting the plan. D informs us that they are capable of thwarting the plan, and have already done it once at that! They are likely do it again. This is the answer.
Quote:
E. Other states that have tried to impose similar targeted tax increases to maintain the solvency of their Medical Aid programs have met with mixed success.

This is a well known GMAC's trap answer. It is always irrelevant, what happened in other locations/to other people/etc.
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Originally posted by HumptyDumpty on 28 Apr 2013, 23:45.
Last edited by HumptyDumpty on 28 Apr 2013, 23:48, edited 1 time in total.
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Re: According to the Department of Social Services, new taxes need to be  [#permalink]

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New post 28 Apr 2013, 23:48
1
IMO, D is correct.

Because this is weaken question, we should attack the conclusion. What is the conclusion here? The question stem tells us the conclusion.

Premise: new taxes need to be generated to maintain the solvency of the state's Medical Aid program
Premise: special tax be imposed on those with incomes greater than $300,000 a year
Conclusion: the governor's plan to maintain the solvency of the state's Medical Aid program is feasible.

Assumption: Ask yourself what is feasibility? Feasibility is that the governor's plan can create cash inflow from tax increase. Hence, the assumption is those with incomes greater than $300,000 a year will pay a special tax. If they won't pay tax, the governor's plan fails.

CONSIDER EACH ANSWER:

A. Before any such tax increase can be imposed, the state is required by law to hold hearings at which objections to the proposed tax hike can be raised.
WRONG. Out of scope

B. Imposing a special tax will fail to address the underlying causes for the increasing costs to maintain the state's Medical Aid program or the increasing number of uninsured residents in the state.
WRONG. Shell game. The conclusion is to focus on how to increase revenue from the new tax plan, not on causes for the increasing costs or the increasing number of uninsured residents.

C. In recent years, changes to the Medical Aid funding formula have shifted much of the burden for maintaining the program from the federal government to state governments.
WRONG. Out of scope.

D. Those with incomes greater than $300,000 a year represent a powerful political constituency in the state and previous attempts to impose tax increases on this group have been blocked by the state legislature.
CORRECT. D says that people who have incomes greater than $300,000 a year will not have to pay tax because they will prevent state legislature from approving the new tax plan.

E. Other states that have tried to impose similar targeted tax increases to maintain the solvency of their Medical Aid programs have met with mixed success.
WRONG. Out of scope.

Hope it helps.
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Re: According to the Department of Social Services, new taxes need to be  [#permalink]

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New post 13 Aug 2013, 04:00
I was a little confused between B and D, but the reason that I eliminated D is: - just because the previous attempts have been blocked by the legislature doesn't mean that it will happen this time in this particular case

As I eliminated D, I chose the option B though I wasn't convinced about B. Simply, I was completely convinced that D was wrong for the above reason, hence I chose the option B.

I request for some help on my thinking process and for some comments on my reasoning for option D.
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Re: According to the Department of Social Services, new taxes need to be  [#permalink]

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New post 05 Nov 2017, 09:50
According to the Department of Social Services, new taxes need to be generated to maintain the solvency of the state's Medical Aid program, which provides medical coverage for the state's poor and uninsured residents. The governor has proposed that a special tax be imposed on those with incomes greater than $300,000 a year to pay for the shortfalls in the Medical Aid program. While new revenues are indeed needed to maintain the Medical Aid program's solvency, the governor's plan for securing the needed funds should be rejected because it would force certain taxpayers to absorb the cost for something from which they would receive no benefit.

Which of the following, if true, would provide proponents of the governor's plan with the strongest counter to the objection that the plan is unfair?

A. Even with the proposed tax increase, the average tax rate on those state residents earning more than $300,000 a year would remain lower than the tax rate on those earning this same income in neighboring states. -We are not worried about the taxes in neighbouring states
B. Any attempt to raise taxes on those with incomes greater than $300,000 a year will cause the affluent to find creative ways to shelter their incomes and lower their taxes and thus will prove self-defeating. -If the people find different ways to shelter their income then the new tax won't have any benefits
C. Those earning more than $300,000 a year benefit when the state directs funding to research into curing diseases such as arthritis, cancer, and heart disease, and the funding for this research is drawn from general income tax revenues to which the all taxpayers contribute. -We are not talking about the research but about the poor and needy
D. When the poor and uninsured go without adequate medical coverage, they avoid medical treatment until their conditions become severe, forcing hospitals to raise rates for everyone so that they can treat this population. -Correct. If a certain category of people don't pat surcharge then the increased prices will impact every section of the economy.
E. The only alternative way of funding the Medical Aid program now being considered is through a general state income tax surcharge, which would affect affluent and middle class taxpayers alike. -We are not interested in the alternative ways
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Re: According to the Department of Social Services, new taxes need to be &nbs [#permalink] 05 Nov 2017, 09:50
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