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# Aroca County s public schools are supported primarily by

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Senior Manager
Joined: 10 Dec 2004
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Aroca County s public schools are supported primarily by  [#permalink]

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21 Feb 2005, 15:56
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Difficulty:

45% (medium)

Question Stats:

67% (01:23) correct 33% (01:39) wrong based on 1607 sessions

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Aroca County’s public schools are supported primarily by taxes on property. The county plans to eliminate the property tax and support schools with a new three percent sales tax on all retail items sold in the county. Three percent of current retail sales is less than the amount collected through property taxes, but implementation of the plan would not necessarily reduce the amount of money going to Aroca County public schools, because ______.

Which if the following, if true, most logically completes the argument?

(A) many Aroca County residents have already left the county because of its high property taxes
(B) a shopping mall likely to draw shoppers from neighboring counties is about to open in Aroca County
(C) at least some Aroca County parents are likely to use the money they will save on property taxes to send their children to private schools not funded by the county
(D) a significant proportion of parents of Aroca County public school students do not own their homes and consequently do not pay property taxes
(E) retailers in Aroca County are not likely to absorb the sales tax by reducing the pretax price of their goods
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21 Feb 2005, 16:46
My answer is C....If more parent use their money that they save from elimination of the property taxes to send their kids to private school then that means that is less of a cost burden to the county and thus not changing the amount going to the public schools...
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Updated on: 21 Feb 2005, 17:25
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Just read my answer to C and it makes no sense...actually I'm going to have to agree with anandnk and 700plus and go with B....if you are not going to get less revenue from your own county but not necessarily less overall then you must be getting money from another source...and B definately addresses the additional revenue source coming from shoppers of neighbouring counties....Yeah that greenandwise character has no idea what he's talking about!!!
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Originally posted by greenandwise on 21 Feb 2005, 17:25.
Last edited by greenandwise on 21 Feb 2005, 17:25, edited 1 time in total.
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21 Feb 2005, 17:25
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B) indicates the possibility of higher revenues because of increased sales from the mall.
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11 Aug 2005, 19:13
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B here. IF the sales tax is replacing the property tax, but with less revenue , the only way to increase revenue would be to have more people buy things and this way increase the sales tax revenue. B comletes the arguement.
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03 May 2009, 20:42
IMO B

Which if the following, if true, most logically completes the argument?
Aroca County’s public schools are supported primarily by taxes on property. The county
plans to eliminate the property tax and support schools with a new three percent sales tax
on all retail items sold in the county. Three percent of current retail sales is less than the
amount collected through property taxes, but implementation of the plan would not
necessarily reduce the amount of money going to Aroca County public schools, because
______.
A. many Aroca County residents have already left the county because of its high
property taxes --> weaken
B. a shopping mall likely to draw shoppers from neighboring counties is about to
open in Aroca County --> best. Many shoppers come to buy goods in Aroca County will make more retails taxes for Aroca, thereby offsetting the loss in properties tax
C. at least some Aroca County parents are likely to use the money they will save on
property taxes to send their children to private schools not funded by the county --> irrelevant and dont' resolve the paradox
D. a significant proportion of parents of Aroca County public school students do not

own their homes and consequently do not pay property taxes --> no influence because not only parents of Aroca County public students pay tax, there are also many other kinds of people who pay tax: no children-families, parents of private students, etc. And if the new law is applied, the property tax still lower than before
E. retailers in Aroca County are not likely to absorb the sales tax by reducing the
pretax price of their goods --> weaken
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Re: Aroca County s public schools are supported primarily by  [#permalink]

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28 Sep 2016, 06:41
Any1 who can explain why E is wrong...
It also suggest that sales tax will not be decreased and thereby giving the strong point to conclude that sales tax will not be low.

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Re: Aroca County s public schools are supported primarily by  [#permalink]

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30 Sep 2016, 06:15
kawaljeet wrote:
Any1 who can explain why E is wrong...
It also suggest that sales tax will not be decreased and thereby giving the strong point to conclude that sales tax will not be low.

The argument says the amount of money we are getting from 3% tax is less than the amount of money we are getting from Property taxes.

Conclusion : The amount currently going via Property tax will not reduced even after the implementation of new plan.

So, even if they are not likely to reduce the price, still we will get the same money, which will be less than what is required. So, it has no effect on the conclusion.

B clearly states that a new shopping complex is going to open. Hence, may be more sales and more money. hence B is correct and E is incorrect.
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Re: Aroca County s public schools are supported primarily by  [#permalink]

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17 Jan 2018, 10:49
kawaljeet wrote:
Any1 who can explain why E is wrong...
It also suggest that sales tax will not be decreased and thereby giving the strong point to conclude that sales tax will not be low.

Option E is actually tough to decipher and I too got stumbled even after reading OE. Still let me try in my own words.

retailer in ..... are not likely to abosrb the sales tax by reducing the pretax price of their goods.

Now not likely means an emphatic way of saying NO. So we can consider that Retailer are not going to decrease pretax prices. So it signifies two things that retailers can do- either increase price or keep it constant.

When price is kept constant, sales tax at 3%. Total price will remain constant So constant sales tax revenue , among other things kept constant{such as no increase in customers, government incentive etc.} , will not compensate for reduction in property tax revenue.

When price is increased, sales tax at 3%. Total price will increase. Total sales may increase among other things kept constant {such as no increase in customers, government incentive etc.}. Now increased price may decrease foot fall because customer will get more incentive if they purchase products from nearby county. So total revenue generated from Salex tax will be less.

Now one can also have a case - even after price increase customer buy products from Aroca county only but certainly it would be rare.

So overall this option is inferior to option B in which explicit co-relation is produced between more customers and more revenue.

R.
Re: Aroca County s public schools are supported primarily by &nbs [#permalink] 17 Jan 2018, 10:49
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