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# CR: Property tax (CR 1000, TestA, Q17)

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CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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21 Jan 2008, 14:59
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This question was posted on the forum a few days ago but not many responses. Want to see if someone can help explain the OA this time. I dont agree with the OA that was posted in the CR 1000.

With Proposition 13, if you bought your house 11 years ago for \$75,000, your property tax would be approximately \$914 a year (1 percent of \$75,000 increased by 2 percent each year for 11 years); and if your neighbor bought an identical house next door to you for \$200,000 this year, his tax would be \$2,000 (1 percent of \$200,000). Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000).
Which of the following is the conclusion for which the author most likely is arguing in the passage above?
(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value.
(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes.
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.
(E) Proposition 13 has benefited some homeowners more than others.

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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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21 Jan 2008, 15:11
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Firstly I would have say A because Proposition 13 imposes an unequal tax on properties of equal value. But would the author say it's unconstitutional .

B seems logical to me! Every homeowner will experience a substantial increase, at least multiplied by 3, and even more if he bought his house a long time ago.

What is OA ? do you have a link for CR1000 ?

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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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21 Jan 2008, 17:10
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My answer would be E. Whats OA?

Simply because with the proposition 13, both home owners pay less than the 6000 USD, but one of them pays substantially lesser.
Anybody else?

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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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21 Jan 2008, 21:14
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This is an inference question. The conclusion must follow what is stated in the passage.
Here, author comparing a house with the identical house next it and clearly mentioning the Proposition 13 is making the identical properties pay different property taxes.

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value. [Way out of the scope of the argument – there is nothing in the passage that mentions anything about “unconstitutional” – eliminate it]
(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.[Firstly, there is no indication of Proposition 13 repealing and secondly, this is extreme conclusion “every home owner” – Eliminate it]
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes.[There is nothing in the passage that talk about inflation – eliminate it]
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. [“sounding a very similar tone as the argument” - Hold it]
(E) Proposition 13 has benefited some homeowners more than others. [May be true that Proposition 13 benefited some home owners compare to others, but nothing in the argument that mentions “benefits” – Eliminate it]

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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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21 Jan 2008, 22:45
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hanumayamma wrote:
This is an inference question. The conclusion must follow what is stated in the passage.
Here, author comparing a house with the identical house next it and clearly mentioning the Proposition 13 is making the identical properties pay different property taxes.

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value. [Way out of the scope of the argument – there is nothing in the passage that mentions anything about “unconstitutional” – eliminate it]
Unconstitutional --New info. -->out

(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.[Firstly, there is no indication of Proposition 13 repealing and secondly, this is extreme conclusion “every home owner” – Eliminate it]
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes.[There is nothing in the passage that talk about inflation – eliminate it]
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. [“sounding a very similar tone as the argument” - Hold it]
(E) Proposition 13 has benefited some homeowners more than others. [May be true that Proposition 13 benefited some home owners compare to others, but nothing in the argument that mentions “benefits” – Eliminate it]

Agree D
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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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21 Jan 2008, 23:12
sondenso wrote:
hanumayamma wrote:
This is an inference question. The conclusion must follow what is stated in the passage.
Here, author comparing a house with the identical house next it and clearly mentioning the Proposition 13 is making the identical properties pay different property taxes.

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value. [Way out of the scope of the argument – there is nothing in the passage that mentions anything about “unconstitutional” – eliminate it]
Unconstitutional --New info. -->out

(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.[Firstly, there is no indication of Proposition 13 repealing and secondly, this is extreme conclusion “every home owner” – Eliminate it]
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes.[There is nothing in the passage that talk about inflation – eliminate it]
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. [“sounding a very similar tone as the argument” - Hold it]
(E) Proposition 13 has benefited some homeowners more than others. [May be true that Proposition 13 benefited some home owners compare to others, but nothing in the argument that mentions “benefits” – Eliminate it]

Agree D

I would have said E but I saw on 1000 cr solutions: OA is B and I agree: in both cases we have a substantial increase of taxes, don't we?

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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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22 Jan 2008, 19:23
OA is B although I agree with you guys that it should be D.

Here are some old threads on the same question

http://gmatclub.com/forum/11-p303944

http://gmatclub.com/forum/11-t32878

No clear explanations of why it should be B though...
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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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10 Feb 2008, 09:12
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Only B can be inferred. D can not be inferred in fact your house and the house of your neighbor are being taxed at the same rate (1 percent for the first year and 2 percent each of the following years). B must be true.

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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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10 Feb 2008, 12:40
neelesh wrote:
This question was posted on the forum a few days ago but not many responses. Want to see if someone can help explain the OA this time. I dont agree with the OA that was posted in the CR 1000.

With Proposition 13, if you bought your house 11 years ago for \$75,000, your property tax would be approximately \$914 a year (1 percent of \$75,000 increased by 2 percent each year for 11 years); and if your neighbor bought an identical house next door to you for \$200,000 this year, his tax would be \$2,000 (1 percent of \$200,000). Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000).
Which of the following is the conclusion for which the author most likely is arguing in the passage above?
(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value. Incorrect. From the facts presented, the author is for Proposition 13.
(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes. Correct. This is evident in the passage above. Both homeowners property taxes would go up without Proposition 13
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes. Irrelevant. No mention of inflation in the statement.
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. Identical properties in the statement are charged different rates because they were bought in different years (11 year gap), not because of proposition 13
(E) Proposition 13 has benefited some homeowners more than others. Irrelevant

I was going to say D too, but having read the OA, B makes sense for the reasons above. Infact, E doesn't sound wrong either :D

Do we have an OE for this?
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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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12 Feb 2008, 05:09
I also picked D. But it is B.
+1 for Q

With Proposition 13, if you bought your house 11 years ago for \$75,000, your property tax would be approximately \$914 a year (1 percent of \$75,000 increased by 2 percent each year for 11 years); and if your neighbor bought an identical house next door to you for \$200,000 this year, his tax would be \$2,000 (1 percent of \$200,000). Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000).

Which of the following is the conclusion for which the author most likely is arguing in the passage above?
"conclusion" is a "must be true" statement.

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value. - "unconstitutional" is an additional information.
(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes. - there are no visible contradictions. the best by POE.
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes. - "preventing inflation" is an additional information.
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. - properties is generalization of houses (Please, correct me if I'm wrong). We cannot infer it from the passage. Is commercial property also taxed in different rates?
(E) Proposition 13 has benefited some homeowners more than others. - I'm not sure but it seems to be incomplete and "has benefited" is not clear here for me.
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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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12 Feb 2008, 11:57
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walker wrote:
I also picked D. But it is B.
+1 for Q

With Proposition 13, if you bought your house 11 years ago for \$75,000, your property tax would be approximately \$914 a year (1 percent of \$75,000 increased by 2 percent each year for 11 years); and if your neighbor bought an identical house next door to you for \$200,000 this year, his tax would be \$2,000 (1 percent of \$200,000). Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000).

Which of the following is the conclusion for which the author most likely is arguing in the passage above?
"conclusion" is a "must be true" statement.

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value. - "unconstitutional" is an additional information.
(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes. - there are no visible contradictions. the best by POE.
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes. - "preventing inflation" is an additional information.
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. - properties is generalization of houses (Please, correct me if I'm wrong). We cannot infer it from the passage. Is commercial property also taxed in different rates?
(E) Proposition 13 has benefited some homeowners more than others. - I'm not sure but it seems to be incomplete and "has benefited" is not clear here for me.

Walker, definitely a tough one (+1 for question). I'm not quite sure if the OA is correct on this.

E is actually making more sense now. Refer the last sentence - "Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000)." ==> However, with Proposition 13, someone who bought their home earlier pays lesser taxes (\$914) than someone who bought an identical house this year (\$2000). It is clearly benefitting early buyers more than others.

B could be wrong because it comes across as being over-generalized ("every houseowner", "substantial increases" etc.). We don't have sufficient information to quantify these claims (especially the "every houseowner" part)
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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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12 Feb 2008, 12:23
incognito1 wrote:
E is actually making more sense now. Refer the last sentence - "Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000)." ==> However, with Proposition 13, someone who bought their home earlier pays lesser taxes (\$914) than someone who bought an identical house this year (\$2000). It is clearly benefitting early buyers more than others.

B could be wrong because it comes across as being over-generalized ("every houseowner", "substantial increases" etc.). We don't have sufficient information to quantify these claims (especially the "every houseowner" part)

I have little CR practice but It seems generalization to be the most tricky trap in "inference" question.
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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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14 Feb 2008, 00:05
I chose B,

My reasoning is

Both B and D are technically right, but if you read question stem
Quote:
Which of the following is the conclusion for which the author most likely is arguing in the passage above?

I believe, authors concern in bringing this up is increase in tax without proposition 13 rather than fact that with proposition 13 , home oweners with same house prices have different tax rates

If he is arguing for choice D then he would not have to make any argument about what will be the tax increase without proposition 13.

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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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14 Feb 2008, 08:24
I chose D and this is why:

With Propisition 13:

FACT: 'if you bought your house 11 years ago for \$75,000, your property tax would be approximately \$914 a year (1 percent of \$75,000 increased by 2 percent each year for 11 years)'

If that is true then THIS YEAR your property tax would be 22% or \$16,500.

FACT: 'if your neighbor bought an identical house next door to you for \$200,000 this year, his tax would be \$2,000 (1 percent of \$200,000)'

If this is true then THIS YEAR your property tax would be 1% or \$2,000

Without Propistion 13:

FACT: Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000).

Even though your bought you house 11 years ago someone who buys the identical house this year pays the exact same amount in property tax.

The only FACT we know for sure between the two options are that with propisition 13 we pay different rates and without propisition 13 we pay the same rate regardless of when the property is purchased.

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value.
We know nothing about constitutional implications
(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.
Some homeowner's tax may increase and some may decrease depending on WHEN they purchased their house
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes.
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.
Only thing we know for sure
(E) Proposition 13 has benefited some homeowners more than others.
Tempting, but we dont know for a fact when the homes were purchased.

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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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14 Feb 2008, 17:56
Quote:
gixxer1000 wrote

The only FACT we know for sure between the two options are that with propisition 13 we pay different rates and without propisition 13 we pay the same rate regardless of when the property is purchased.

I believe question stem is NOT asking "what we can infer for sure"

Question stem asks what author is likely arguing for?

Last edited by kyatin on 14 Feb 2008, 22:23, edited 1 time in total.

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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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14 Feb 2008, 21:11
neelesh wrote:
This question was posted on the forum a few days ago but not many responses. Want to see if someone can help explain the OA this time. I dont agree with the OA that was posted in the CR 1000.

With Proposition 13, if you bought your house 11 years ago for \$75,000, your property tax would be approximately \$914 a year (1 percent of \$75,000 increased by 2 percent each year for 11 years); and if your neighbor bought an identical house next door to you for \$200,000 this year, his tax would be \$2,000 (1 percent of \$200,000). Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000).
Which of the following is the conclusion for which the author most likely is arguing in the passage above?

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value. The author's tone is not negative. Eliminate this.

(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes. Correct. First two statements give us an idea of what current homeowners are paying for identical properties (one tells about recent buyers and the other about early buyers). The third sentence dictates what happens when Proposition 13 is repealed ("Without Proposition 13..") Had the statement not been over-generalized ("every homeowner", "substantial"), this would have been a clear favorite

(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes. Clearly irrelevant.

(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. Incorrect. The reason why identical properties in our example are taxed differently is because they were bought during different times. The reference to "identical properties" is misleading here, what if two identical houses were bought in the same year - would Proposition 13 tax them differently? No. Even though they are identical.

(E) Proposition 13 has benefited some homeowners more than others. While factually accurate, this does not highlight the authors intended conclusion. The last statement in the stimulus examines what happens when Proposition 13 is withdrawn, and this condition is best addressed by choice (B)

Revised assessment - I think I now somewhat understand the OA. walker, kyatin and others who said (B) are correct. (E), while also correct, is not the actual conclusion that the author is arguing for. Feel free to critique.

[Honestly, they shouldn't put such options in the real test. It can be rather misleading. I still don't see why (E) is fully incorrect. Just have a hunch that (B) is better]
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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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15 Feb 2008, 06:41
kyatin wrote:
Quote:
gixxer1000 wrote

The only FACT we know for sure between the two options are that with propisition 13 we pay different rates and without propisition 13 we pay the same rate regardless of when the property is purchased.

I believe question stem is NOT asking "what we can infer for sure"

Question stem asks what author is likely arguing for?

I think the wording of the question is confusing a lot of people. This is no different than a question like 'what can we infer from the passage?'. This is an inference question. In an inference question the right answer has to be the answer that MUST be correct. Check any GMAT source they will tell you that they cannot make an question where two answers are right and one is just more right. So the best way to solve is to eliminate the answers that do NOT have to be true

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value.
Out of scope, does not have to be true
(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.
If you purchase a house this year your property tax will decrease, does not have to be true
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes.
Out of scope, does not have to be true
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.
This has to be true you. Under no circumstance can you prove that this is not correct
(E) Proposition 13 has benefited some homeowners more than others.
This doesnt say switching from proposition 13 would benefit other it says propisition 13 HAS benefited some homeowners more than others. If propisition 13 is not repealed why would it benefit some homeowners over others? Everyone pays the same rates associated with propisition 13. This does not have to be true.

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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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15 Feb 2008, 06:56
incognito1 wrote:
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. Incorrect. The reason why identical properties in our example are taxed differently is because they were bought during different times. The reference to "identical properties" is misleading here, what if two identical houses were bought in the same year - would Proposition 13 tax them differently? No. Even though they are identical.

That's the whole point D is trying to make. The reason that people are paying different rates under prop 13 is because they bought the identical properties at different years. Without propisition 13 you would pay the exact same rate no matter what. That means that every year the value of the property would be assed and you would pay 3% of that. So even if you bought the house 11 years ago for \$75,000 it is now worth \$200,000 because the identical property was just purchased for that amount. You now pay \$6,000(3% of \$200,000) just like the homeowner who purchased the property this year.

With Proposition 13, if you bought your house 11 years ago for \$75,000, your property tax would be approximately \$914 a year (1 percent of \$75,000 increased by 2 percent each year for 11 years); and if your neighbor bought an identical house next door to you for \$200,000 this year, his tax would be \$2,000 (1 percent of \$200,000). Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000).

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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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15 Feb 2008, 07:43
gixxer1000 wrote:
incognito1 wrote:
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. Incorrect. The reason why identical properties in our example are taxed differently is because they were bought during different times. The reference to "identical properties" is misleading here, what if two identical houses were bought in the same year - would Proposition 13 tax them differently? No. Even though they are identical.

That's the whole point D is trying to make. The reason that people are paying different rates under prop 13 is because they bought the identical properties at different years. Without propisition 13 you would pay the exact same rate no matter what. That means that every year the value of the property would be assed and you would pay 3% of that. So even if you bought the house 11 years ago for \$75,000 it is now worth \$200,000 because the identical property was just purchased for that amount. You now pay \$6,000(3% of \$200,000) just like the homeowner who purchased the property this year.

With Proposition 13, if you bought your house 11 years ago for \$75,000, your property tax would be approximately \$914 a year (1 percent of \$75,000 increased by 2 percent each year for 11 years); and if your neighbor bought an identical house next door to you for \$200,000 this year, his tax would be \$2,000 (1 percent of \$200,000). Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000).

I wish we can get in a room to discuss...it would be fun.

I am convinced now that its B, for me.

If you read carefully the underlined text in above comment....you and your neighbour bought "identical" houses in different year....if you both sell it this year then new owners will pay same tax with proposition 13....SO D does NOT have to be true.

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Re: CR: Property tax (CR 1000, TestA, Q17) [#permalink]

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15 Feb 2008, 08:36
kyatin wrote:
gixxer1000 wrote:
incognito1 wrote:
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. Incorrect. The reason why identical properties in our example are taxed differently is because they were bought during different times. The reference to "identical properties" is misleading here, what if two identical houses were bought in the same year - would Proposition 13 tax them differently? No. Even though they are identical.

That's the whole point D is trying to make. The reason that people are paying different rates under prop 13 is because they bought the identical properties at different years. Without propisition 13 you would pay the exact same rate no matter what. That means that every year the value of the property would be assed and you would pay 3% of that. So even if you bought the house 11 years ago for \$75,000 it is now worth \$200,000 because the identical property was just purchased for that amount. You now pay \$6,000(3% of \$200,000) just like the homeowner who purchased the property this year.

With Proposition 13, if you bought your house 11 years ago for \$75,000, your property tax would be approximately \$914 a year (1 percent of \$75,000 increased by 2 percent each year for 11 years); and if your neighbor bought an identical house next door to you for \$200,000 this year, his tax would be \$2,000 (1 percent of \$200,000). Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000).

I wish we can get in a room to discuss...it would be fun.

I am convinced now that its B, for me.

If you read carefully the underlined text in above comment....you and your neighbour bought "identical" houses in different year....if you both sell it this year then new owners will pay same tax with proposition 13....SO D does NOT have to be true.

I agree, it so hard to convey things with only written words.

I also agree that IF you bought identical properties in the same year under prop 13 you would pay the same amount it taxes. So for prop 13 everyone would always have to buy identical properties at the same time or they will pay different rates.

Without prop 13 you are guaranteed to pay the same rate on identical properties no matter when you purchase the house.

Statement B says without prop 13 EVERY home owner will experience an increase in taxes.

If you bought a home 11 years ago you would be paying 22% for property tax. If they repeal it your tax rate would drop to 3%. That is a substantial decrease not increase.

Here would be the options for the home owner who bought the house 11 years ago:
With: \$75,000 x 22% = \$16,500
Without:\$200,000 x 3% = \$6,000

B is clearly wrong.

Kudos [?]: 187 [0], given: 0

Re: CR: Property tax (CR 1000, TestA, Q17)   [#permalink] 15 Feb 2008, 08:36

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