NikMan wrote:
C vs E? Not sure that the comments so far are conclusive. Have commented in detail, as well. Thanks
Thanks for walking through your thoughts on these answer choices!
The best advice I can offer is: avoid turning this (or any other verbal question) into a quantitative problem if you can identify the best answer choice based on the logic of the argument. Here's that argument again:
Quote:
In order to raise revenue, the federal government planned a tax amnesty program that allows tax delinquents to pay all owed tax without added financial penalty. However, economists projected that the federal government would collect a far lower percentage of total tax owed by delinquents than did state governments implementing similar programs.
Let's break down what's presented, without introducing any hypotheticals or re-phrasing:
- Economists conclude that when compared to States, Feds will collect a far lower % of total tax owed to them by delinquents.
- We're talking about tax delinquents. This program is only concerned with taxpayers who are already late in paying their taxes.
- The Feds' program allows delinquents to pay all of what they already owe, without added financial penalty. This implies that the penalty in question is issued at the moment when a delinquent steps forward and pays all taxes owed.
The logic of this program is that delinquents will willingly pay all of what they owe, if doing so doesn't cost them anything extra.
Yet, economists conclude that the Feds' version of this program will bring in a smaller proportion of owed taxes than States' versions of this program. We aren't given any information that would explain this difference between Federal outcome and State outcome.
Quote:
Which of the following, if true, would most contribute to an explanation of the economists’ projections?
We're looking for the answer choice that most strengthens the economists' conclusion. The right choice does NOT have to prove the economists' conclusion. It just has to make the conclusion easier to believe by connecting the missing logical dots. In other words, we want a choice that shows us:
- Why State delinquents are more willing to pay all that they owe in this amnesty program, OR
- Why Federal delinquents are less willing to pay all that they owe in this amnesty program.
Since discussion around choice (C) and (E) has been the focus of this thread so far, let's start there.
Quote:
C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.
Wait a minute. The amnesty program
gets rid of added financial penalties for delinquents who pay what they owe. If amnesty reduces this penalty to $0 at the Federal level
and the State level, does it matter if the penalty was high or low before these programs were implemented? Knowing what the federal and state penalties were usually like
before these programs are implemented doesn't directly explain the economists' conclusion, which projects how much total tax will be collected
after these programs are implemented.
If anything, Choice (C) weakens the conclusion, because it states that Federal penalties would have been high without the amnesty program. So if you're a delinquent, and you learn that your penalty is about to go from "high" to "$0," then you've gained an extra incentive to pay what you owe now.
From either line of reasoning, (C) does not make the economists' conclusion easier to believe. Either this information is
irrelevant to why Federal delinquents would pay at a lower rate than State delinquents, or it leads us to expect delinquents to be
more willing to pay the Feds. This is why we eliminate (C).
Quote:
E. Unlike most federal tax delinquents, most state tax delinquents fail to pay state tax because of an oversight rather than a decision not to pay.
(E) is a much better answer choice because it goes straight for the heart of this argument:
why each type of delinquents would pay or not pay what they owe. This choice neatly tells us:
- State delinquents don't pay what they owe because of an oversight (i.e., a mistake), rather than a decision not to pay.
- State delinquents are unlike most federal tax delinquents.
- This implies that most federal tax delinquents don't pay what they because they're deciding not to pay, rather than because of an oversight.
This connects the logical dots we were missing! If (E) is true, then we know why economists would expect to see a smaller % of owed taxes collected through the federal program: Most Federal delinquents are trying
not to pay at all. They're not just trying to avoid a penalty; they're trying to avoid paying taxes. So simply eliminating an added penalty is unlikely to impact that avoidance.
Given this information we'd expect the Federal program to bring in a smaller % of owed taxes than comparable State programs. So let's keep (E) and run our process of elimination on (A), (B), and (D) to be sure we haven't missed an even more convincing choice.
Quote:
A. Tax amnesty programs are only successful if they are widely publicized.
So what? As pointed out by
gixxer1000 ages ago, (A) doesn't tell us a single thing about why Federal delinquents would be less willing to pay what they owe or why State delinquents would be more willing to pay what they owe. Get outta here, (A).
Quote:
B. Most people who honestly pay their state tax are equally honest in paying their federal tax.
We only care about
delinquents, i.e., people who have not paid their taxes yet. And knowing whether or not the delinquents are honest is irrelevant. Knowing that honest federal taxpayers are just as honest as state taxpayers is miles away from the types of taxpayers we're thinking about and the logical argument we've been analyzing. Eliminate (B).
Quote:
D. The state tax rate varies considerably from state to state, but the federal tax is levied according to laws which apply to citizens of all the states.
Huh? So you're telling me that state taxes are
state taxes, and... the federal tax is a
federal tax? (D) adds absolutely no information to the passage or the argument. It just tells us state and federal taxes are based on different laws. Eliminate (D).
(E) is
by far the best answer choice, so we can keep it and move onto the next question.
I hope this helps!