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# Fact1: Over the past eight years , cuts in federal income

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Senior Manager
Joined: 19 Feb 2004
Posts: 413

Kudos [?]: 38 [0], given: 0

Location: Lungi
Fact1: Over the past eight years , cuts in federal income [#permalink]

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01 Apr 2004, 07:03
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Question Stats:

80% (00:44) correct 20% (00:59) wrong based on 12 sessions

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Fact1: Over the past eight years , cuts in federal income tax
rates have resulted in US taxpayers paying a smaller proportion of
their incomes as federal taxes.

Fact2: OVer the past eight years , US taxpayers have paid a larger
proportion of their incomes as state and local taxes.

Fact1 would most likely contribute to an explanation of Fact2 if
which of the following were true?

a. An increased demand in the number and quality of services provided
by state an local authorities has occured in the last eight years.
b. Lower federal income taxes have increased the amount of money in
the economy available for discretionary spending.
c. Over the past years, a large number of states have instituted
state income taxes, in addition to the more common property and sales
taxes.
d. Cuts in the federal income tax were made possible by ending or
downsizing many federal programs.
e. Cuts in the federal income tax were made possible by shifting the
costs of some programs to state and local authorities.

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Director
Joined: 03 Jul 2003
Posts: 651

Kudos [?]: 104 [0], given: 0

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01 Apr 2004, 10:27
Another tough one!

My choice is B

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GMAT Club Legend
Joined: 15 Dec 2003
Posts: 4285

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01 Apr 2004, 11:41
E for me also. B does not establish the link from fact 1 to fact 2 because even though customers have more discretionary spending, they could be spending more on federal services which would then not explain how fact 2 can be possible
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Best Regards,

Paul

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Manager
Joined: 07 May 2013
Posts: 108

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Re: Fact1: Over the past eight years , cuts in federal income [#permalink]

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05 Aug 2013, 18:36
E is the answer as the government is shifting the fiscal burden accumulated by cuts in federal tax to local/state tax.

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Re: Fact1: Over the past eight years , cuts in federal income   [#permalink] 05 Aug 2013, 18:36
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