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Urban planner: The mayor of Dismaston supports a new tax code that wou

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Urban planner: The mayor of Dismaston supports a new tax code that wou [#permalink]

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Urban planner: The mayor of Dismaston supports a new tax code that would assess local businesses on the property value of their site rather than on their income or profits; the mayor argues that this change will not contribute to any loss in tax revenue for the city. Several city council members disagree, citing similar changes to tax code that were unsuccessful in cities similar to Dismaston. The council members’ argument is without merit, though, because property values rise steadily each year, while business incomes fluctuate wildly with the national economy.

Which of the following is an assumption on which the argument depends?

(A) The new tax code would not apply to the significant number of online business associated with the city that have no physical presence on a piece of property in the city.

(B) In previous years, the successes and failures of many previous Dismaston tax codes to generate income have been mirrored by similar tax codes in the the same cities similar to Dismaston in other respects.

(C) A small number of store fronts in the downtown neighborhood are vacant: under the new code, these businesses are likely to owe higher taxes than they have paid, unless some loophole is written into the law.

(D) The annual percentage rise in real estate values in Dismaston has been consistently more than the average annual growth rate percentages across all businesses with properties in Dismaston.

(E) In any year, some unsuccessful businesses will close and other businesses, some quite promising, will open, but total amount of property in the city is fixed and unchanging, providing greater stability.


For the GMAT CR questions, it's crucial to understand assumptions and the Negation Test for them. For a discussion of these issues, as well as the OE of this question, see:
http://magoosh.com/gmat/2016/gmat-criti ... questions/

Mike :-)
[Reveal] Spoiler: OA

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Re: Urban planner: The mayor of Dismaston supports a new tax code that wou [#permalink]

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New post 04 Apr 2016, 09:36
mikemcgarry wrote:
Urban planner: The mayor of Dismaston supports a new tax code that would assess local businesses on the property value of their site rather than on their income or profits; the mayor argues that this change will not contribute to any loss in tax revenue for the city. Several city council members disagree, citing similar changes to tax code that were unsuccessful in cities similar to Dismaston. The council members’ argument is without merit, though, because property values rise steadily each year, while business incomes fluctuate wildly with the national economy.

Which of the following is an assumption on which the argument depends?

(A) The new tax code would not apply to the significant number of online business associated with the city that have no physical presence on a piece of property in the city.

(B) In previous years, the successes and failures of many previous Dismaston tax codes to generate income have been mirrored by similar tax codes in the the same cities similar to Dismaston in other respects.

(C) A small number of store fronts in the downtown neighborhood are vacant: under the new code, these businesses are likely to owe higher taxes than they have paid, unless some loophole is written into the law.

(D) The annual percentage rise in real estate values in Dismaston has been consistently more than the average annual growth rate percentages across all businesses with properties in Dismaston.

(E) In any year, some unsuccessful businesses will close and other businesses, some quite promising, will open, but total amount of property in the city is fixed and unchanging, providing greater stability.


For the GMAT CR questions, it's crucial to understand assumptions and the Negation Test for them. For a discussion of these issues, as well as the OE of this question, see:
http://magoosh.com/gmat/2016/gmat-criti ... questions/

Mike :-)


Fell for 'E'.. my bad :(
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Re: Urban planner: The mayor of Dismaston supports a new tax code that wou [#permalink]

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New post 14 Jul 2016, 22:40
Dear Mike,
Could you please ellaborate why D is correct.

My assessment was that, what if Business total income or profit in city was 1000M $ ( with 1% average annual growth) compared to 100M $ ( with 2% annual growth rate). Then such a growth would not be beneficial for new tax code.

However if city has significant number of online business with no property ( let o.business is 60-70% of total businesses) than they would not be paying as per new tax code and overall tax will be low.

Negating A i.e. would falsify the conclusion and mayor plan will backfire.

The new tax code would apply to the significant number of online business associated with the city that have no physical presence on a piece of property in the city.

Kindly share some wisdom

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Urban planner: The mayor of Dismaston supports a new tax code that wou [#permalink]

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OmarFirdaus wrote:
Dear Mike,
Could you please ellaborate why D is correct.

My assessment was that, what if Business total income or profit in city was 1000M $ ( with 1% average annual growth) compared to 100M $ ( with 2% annual growth rate). Then such a growth would not be beneficial for new tax code.

However if city has significant number of online business with no property ( let o.business is 60-70% of total businesses) than they would not be paying as per new tax code and overall tax will be low.

Negating A i.e. would falsify the conclusion and mayor plan will backfire.

The new tax code would apply to the significant number of online business associated with the city that have no physical presence on a piece of property in the city.

Kindly share some wisdom


Hello, Omar.

This is the conclusion of the argument.

"The council members’ argument is without merit, though, because property values rise steadily each year, while business incomes fluctuate wildly with the national economy."

This is a correct conclusion if business incomes fluctuate more in the lower direction.
But if business fluctuates more in the growth direction then the conclusion is wrong .
In other words, we should understand what we have in average: business income growth bigger than property average growth or vice versa.

In D we clearly see that growth of property will grow faster than the growth of business incomes.

A is wrong because we don't know exactly how many online businesses in this city.
For example, the city has 99.99% of tax revenue from offline businesses and 0.01% from online. Then city doesn't care about taxes from online.
But if the city has 99,99% of tax revenue from online businesses than argument A creates a problem.
So for argument A to be correct we need to know the ratio of online to offline businesses.
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Re: Urban planner: The mayor of Dismaston supports a new tax code that wou [#permalink]

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OmarFirdaus wrote:
Dear Mike,
Could you please ellaborate why D is correct.

My assessment was that, what if Business total income or profit in city was 1000M $ ( with 1% average annual growth) compared to 100M $ ( with 2% annual growth rate). Then such a growth would not be beneficial for new tax code.

However if city has significant number of online business with no property ( let o.business is 60-70% of total businesses) than they would not be paying as per new tax code and overall tax will be low.

Negating A i.e. would falsify the conclusion and mayor plan will backfire.

The new tax code would apply to the significant number of online business associated with the city that have no physical presence on a piece of property in the city.

Kindly share some wisdom

Dear Omar,
I see that Harley1980 already gave you a good response, and I am happy to respond as well. :-)

What is very tricky about this argument is that there are layers of arguments packed inside one another.
1) The mayor makes an argument for his tax plan.
2) The city council may a counterargument against (1)
3) The author of the prompt makes a counterargument against (2), essentially supporting (1)
The target of any GMAT CR prompt (assumption, strengthen, weaken, etc.) is ALWAYS the argument of the author of the prompt argument. Here, we are asked to find an assumption for (3), which necessarily would support (1) as well.

We are not trying to damage the mayor's plan----we are trying to support it, because (3) supports (1).

Does all this make sense?
Mike :-)
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Re: Urban planner: The mayor of Dismaston supports a new tax code that wou [#permalink]

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New post 17 Jul 2016, 10:25
Got it ............
Thanks HARLEY & MIKE.

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Re: Urban planner: The mayor of Dismaston supports a new tax code that wou [#permalink]

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New post 03 Nov 2017, 13:12
D is a very common pattern in gmat. A is also another pattern, and in this question, A is a trap n/c A does not concern directly with the revenues or profits from taxes.
B,C,E are definitely out of scope.

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Re: Urban planner: The mayor of Dismaston supports a new tax code that wou [#permalink]

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New post 11 Nov 2017, 06:33
mikemcgarry wrote:
Urban planner: The mayor of Dismaston supports a new tax code that would assess local businesses on the property value of their site rather than on their income or profits; the mayor argues that this change will not contribute to any loss in tax revenue for the city. Several city council members disagree, citing similar changes to tax code that were unsuccessful in cities similar to Dismaston. The council members’ argument is without merit, though, because property values rise steadily each year, while business incomes fluctuate wildly with the national economy.

Which of the following is an assumption on which the argument depends?

(A) The new tax code would not apply to the significant number of online business associated with the city that have no physical presence on a piece of property in the city.

(B) In previous years, the successes and failures of many previous Dismaston tax codes to generate income have been mirrored by similar tax codes in the the same cities similar to Dismaston in other respects.

(C) A small number of store fronts in the downtown neighborhood are vacant: under the new code, these businesses are likely to owe higher taxes than they have paid, unless some loophole is written into the law.

(D) The annual percentage rise in real estate values in Dismaston has been consistently more than the average annual growth rate percentages across all businesses with properties in Dismaston.

(E) In any year, some unsuccessful businesses will close and other businesses, some quite promising, will open, but total amount of property in the city is fixed and unchanging, providing greater stability.


For the GMAT CR questions, it's crucial to understand assumptions and the Negation Test for them. For a discussion of these issues, as well as the OE of this question, see:
http://magoosh.com/gmat/2016/gmat-criti ... questions/

Mike :-)


mikemcgarry Wonderful question Mike
No doubt you are the best.
Though it took me around 4 minutes to solve it, but the time was worth spent on the question(( the answer was correct :) )
Was confused a bit between D and E
but the tired negation on E and wasnt getting any good conclusion destruction
D is a clear winner here
My takeaways
(D) The annual percentage rise in real estate values in Dismaston has been consistently more than the average annual growth rate percentages across all businesses with properties in Dismaston.
Given in the question property values rise steadily each year, while business incomes fluctuate wildly with the national economy.
Here anual percentage rise of real estate values (( properties )) is consistent means that property value rise every year consistently.

the average annual growth rate of businesses with properties signifies the business income fuctuations (([color=#9e0039]An average encapsulates the total sum/ total number , now this could mean
that sometimes the numbers contributing to the sum can be high and some time low
[/color]
in all they are not consistent, but fluctuating
negating this breaks the conclusion provided by urban planner
P.s. wonderful question Mike
:)

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Re: Urban planner: The mayor of Dismaston supports a new tax code that wou   [#permalink] 11 Nov 2017, 06:33
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