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# In order to raise revenue, the federal government planned a

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Re: In order to raise revenue, the federal government planned a [#permalink]

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11 Oct 2016, 08:13
Hi everyone,

Here's my video explanation of the question. Hope you enjoy!

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Re: In order to raise revenue, the federal government planned a [#permalink]

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19 Oct 2016, 05:28
ankur1901 wrote:
i will go with C. Below is the conclusion

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.

Now we need to bear in mind that no amount of tax is pardoned, only penalty is pardoned. Had there been no amnesty program, tax collected will be Original tax + penalty.
Due to amnesty both state and federal govt is going to pardon the penalty.

Only if Federal penalty is higher than state penalty, the total tax collected by federal govt will be less than state govt.
Ans choice C mentions exactly the same thing.

As for E - chosen by around 60% respondents, here is my understanding.

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.

We are looking for strengthener to conclusion : while E tells the reason for delinquency of federal and state tax..it no way gives us the reason to believe why Federal tax program will collect lesser amount.

The arguments is comparing percentages, not absolute quantities.

Most people agree that the answer is either C or E

C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.

The higher the penalties, the stronger the reasons to pay on time. Then there would be fewer delinquents. However, we do not know if these delinquents are going to pay.

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.

If most state tax delinquents failed to pay state tax because of an oversight (let’s say 80%). These delinquents are likely to pay the tax owed (let’s say 90%), and the rest (20%) failed to pay because they did not want to pay. These delinquents are not likely to pay the tax owed (let’s say that only 10% paid). So, from 100 delinquents 80% * 90% (because of an oversight) + 20% * 10% (because they did not want to pay) = 72% + 2% = 74% state tax delinquents would pay.

If few federal tax delinquents failed to pay state tax because of an oversight (let’s say 20%). These delinquents are likely to pay the tax owed (let’s say 90%), and the rest (60%) failed to pay because they did not want to pay. These delinquents are not likely to pay the tax owed (let’s say that only 10% paid). So, from 100 delinquents 20% * 90% (because of an oversight) + 80% * 10% (because they did not want to pay) = 18% + 8% = 26% federal tax delinquents would pay.

So, the federal government would collect a far lower percentage of total tax owed by delinquents.

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Re: In order to raise revenue, the federal government planned a [#permalink]

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04 Feb 2017, 06:30
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Danuthan wrote:
Can someone please explain why D is out of scope?

I thought that if the tax rates are different in each states, then people will be more willing to pay the tax according to the rates that the are supposed to pay. Whereas federal tax requires all citizen to pay the same amount of tax, which to some may be higher that their state's tax rate.

Thanks,

DT

Hi,
the tax for state varies doesnt mean it will be more than federal tax. The statment doesn't give the reason why people will pay state tax but not federal tax. Hence , the provided info is irrelevant.
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Re: In order to raise revenue, the federal government planned a [#permalink]

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19 Feb 2017, 04:48
Hi,

Initially, I arrived at E by POE - I did not find other options convincing enough to strengthen the argument. Only after I got to know that E is the OE, I reasoned it as below
Please check if my approach as described below is fine. Also please share if I am missing anything in this problem.

Reading the stem it's a 'if true' question and is asking which of the options would most 'contribute' to an explanation of XYZ. It's a strengthen question. Let's read the argument.
Govt. has introduced a plan to increase revenues. The plan says that all those who consciously did not pay tax can pay it and that they will not be penalized for it. Now the argument make a logical leap by saying that some people (economists) opine that "% federal collection of tax owed by defaulters" will be quite low as compared to the collections by state governments that implement similar schemes.
Are the state govts. doing something extra that the fed. govt. is not doing ?
Let's check options.
A> Publicity of plan is not the issue at hand. Further, no info is given regarding the difference in publicity, if any, between the state plans and federal plans. Eliminated.
B> This talks about "those who honestly pay tax". Issue at hand is the % tax owed by the defaulters. Eliminated.
C> It says federal offenders must pay high penalty but state ones need to pay lower penalties. But this is not within the purview of the fed. plan. The plan is removing the penalty altogether. We need to strengthen the conclusion that the fed plan will collect quite less % of tax owed by defaulters. Eliminated.
D> How the general tax structure varies is of no use to us.
E> Federal tax defaulters make a decision not to pay tax. State tax defaulters don't pay just because they forget. Ok, so, if it's just a case of an oversight, a reminder by the states ( that is similar plan as mentioned in the argument) may just cause them to pay up. But the fed. defaulters have made a decision not to pay. It's hard to say that they will pay up despite reminders (that is the fed plan).
So E looks fine.

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Re: In order to raise revenue, the federal government planned a [#permalink]

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21 Feb 2017, 11:19
ajay2121988 wrote:
Hi,

Initially, I arrived at E by POE - I did not find other options convincing enough to strengthen the argument. Only after I got to know that E is the OE, I reasoned it as below
Please check if my approach as described below is fine. Also please share if I am missing anything in this problem.

Reading the stem it's a 'if true' question and is asking which of the options would most 'contribute' to an explanation of XYZ. It's a strengthen question. Let's read the argument.
Govt. has introduced a plan to increase revenues. The plan says that all those who consciously did not pay tax can pay it and that they will not be penalized for it. Now the argument make a logical leap by saying that some people (economists) opine that "% federal collection of tax owed by defaulters" will be quite low as compared to the collections by state governments that implement similar schemes.
Are the state govts. doing something extra that the fed. govt. is not doing ?
Let's check options.
A> Publicity of plan is not the issue at hand. Further, no info is given regarding the difference in publicity, if any, between the state plans and federal plans. Eliminated.
B> This talks about "those who honestly pay tax". Issue at hand is the % tax owed by the defaulters. Eliminated.
C> It says federal offenders must pay high penalty but state ones need to pay lower penalties. But this is not within the purview of the fed. plan. The plan is removing the penalty altogether. We need to strengthen the conclusion that the fed plan will collect quite less % of tax owed by defaulters. Eliminated.
D> How the general tax structure varies is of no use to us.
E> Federal tax defaulters make a decision not to pay tax. State tax defaulters don't pay just because they forget. Ok, so, if it's just a case of an oversight, a reminder by the states ( that is similar plan as mentioned in the argument) may just cause them to pay up. But the fed. defaulters have made a decision not to pay. It's hard to say that they will pay up despite reminders (that is the fed plan).
So E looks fine.

Do you have a specific query? (you clicked the "request expert's response" button.) The OA is E, and you have arrived at the correct answer.

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Re: In order to raise revenue, the federal government planned a [#permalink]

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09 Jul 2017, 15:03
chetan2u wrote:
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. Which of the following, if true, would most contribute to an explanation of the economists’ projections?

A. Tax amnesty programs are only successful if they are widely publicized.
out of context

B. Most people who honestly pay their state tax are equally honest in paying their federal tax.
again out of context.. we are looking at a relationship between defaulters at federal and state level

C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.
this would rather lead to opposite of economists projection

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.
out of context

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.
CORRECT...this is the difference we are looking for
ans E

Can someone clarify option C?

To answer this Strengthen question, we are looking for some reason why Federal is collecting less revenue than State. These reasons could be:

1) Federal has higher initial penalties than State (but no added penalties) thus delinquents don't even want to pay Federal - it's too expensive. However, they can pay State taxes since penalties are lower. This is C.

2) Something about the delinquents in Fed vs State is different - Perhaps one is habitual tax evaders while the other are just normal "oh I forgot to file my state taxes" types. The latter are more likely to pay their taxes even though its late. This is E.

How to choose?

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Re: In order to raise revenue, the federal government planned a [#permalink]

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09 Jul 2017, 20:21
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. Which of the following, if true, would most contribute to an explanation of the economists’ projections?

A. Tax amnesty programs are only successful if they are widely publicized.

B. Most people who honestly pay their state tax are equally honest in paying their federal tax.

C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.

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.

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.

Error Analysis:

The argument says that with the revision in the method of tax collection, the central government will be collecting far lower tax than the state government. We have to back the argument with a valid reason.

Pre Thinking:

May be the tax delinquents are hesitating to pay the central tax for a reason , but just forgot to pay the state tax.
Oversight- Carelessness, forgot to pay.... ( i am not giving the exact meaning, but a close one)

Only Option E is in the same line of reasoning and therefore it is the answer.

Last edited by harikrish on 09 Jul 2017, 20:26, edited 1 time in total.

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Re: In order to raise revenue, the federal government planned a [#permalink]

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09 Jul 2017, 20:25
iyera211 wrote:
chetan2u wrote:
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. Which of the following, if true, would most contribute to an explanation of the economists’ projections?

A. Tax amnesty programs are only successful if they are widely publicized.
out of context

B. Most people who honestly pay their state tax are equally honest in paying their federal tax.
again out of context.. we are looking at a relationship between defaulters at federal and state level

C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.
this would rather lead to opposite of economists projection

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.
out of context

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.
CORRECT...this is the difference we are looking for
ans E

Can someone clarify option C?

To answer this Strengthen question, we are looking for some reason why Federal is collecting less revenue than State. These reasons could be:

1) Federal has higher initial penalties than State (but no added penalties) thus delinquents don't even want to pay Federal - it's too expensive. However, they can pay State taxes since penalties are lower. This is C.

2) Something about the delinquents in Fed vs State is different - Perhaps one is habitual tax evaders while the other are just normal "oh I forgot to file my state taxes" types. The latter are more likely to pay their taxes even though its late. This is E.

How to choose?

Explanation:

With Option C,
1. The sentence is too strong.
2. You are given clearly in the argument that the penalties are removed.

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Re: In order to raise revenue, the federal government planned a [#permalink]

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09 Jul 2017, 21:12
iyera211 wrote:
Can someone clarify option C?

To answer this Strengthen question, we are looking for some reason why Federal is collecting less revenue than State. These reasons could be:

1) Federal has higher initial penalties than State (but no added penalties) thus delinquents don't even want to pay Federal - it's too expensive. However, they can pay State taxes since penalties are lower. This is C.

2) Something about the delinquents in Fed vs State is different - Perhaps one is habitual tax evaders while the other are just normal "oh I forgot to file my state taxes" types. The latter are more likely to pay their taxes even though its late. This is E.

How to choose?

I'm gonna clarify how I understand and analyze options (C) and (E). Hope this helps.

C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.

--> Amnesty program helps waive financial penalties, therefore, tax delinquents will benefit more from federal tax than from state tax, because the amount of waived financial penalties in federal tax is higher than that in state tax. As a result, tax delinquents will be more likely to pay tax to federal gov than to state gov, resulting in higher percentage of total tax collected by federal gov. This definitely weakens the conclusion. INCORRECT!

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.

--> This option points out difference in reasons for tax delinquency of federal tax and state tax, explaining why the amnesty program might be less effective if implemented by federal gov than by state gov. To speak explicitly, if federal tax delinquents intentionally decide not to pay, then they will be very likely to continue that behavior even when added financial penalty is exempted. The conclusion is strengthened. CORRECT!
(Remember that, initially when these federal tax payers haven't committed to tax delinquency, they chose to not pay; it means that the exemption of tax delinquency is out of their interest.)

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Re: In order to raise revenue, the federal government planned a [#permalink]

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10 Jul 2017, 07:30
harikrish wrote:
iyera211 wrote:
chetan2u wrote:
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. Which of the following, if true, would most contribute to an explanation of the economists’ projections?

A. Tax amnesty programs are only successful if they are widely publicized.
out of context

B. Most people who honestly pay their state tax are equally honest in paying their federal tax.
again out of context.. we are looking at a relationship between defaulters at federal and state level

C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.
this would rather lead to opposite of economists projection

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.
out of context

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.
CORRECT...this is the difference we are looking for
ans E

Can someone clarify option C?

To answer this Strengthen question, we are looking for some reason why Federal is collecting less revenue than State. These reasons could be:

1) Federal has higher initial penalties than State (but no added penalties) thus delinquents don't even want to pay Federal - it's too expensive. However, they can pay State taxes since penalties are lower. This is C.

2) Something about the delinquents in Fed vs State is different - Perhaps one is habitual tax evaders while the other are just normal "oh I forgot to file my state taxes" types. The latter are more likely to pay their taxes even though its late. This is E.

How to choose?

Explanation:

With Option C,
1. The sentence is too strong.
2. You are given clearly in the argument that the penalties are removed.

There are no "Added" penalties. Thus, nothing new. However any pre-existing penalties may still exist.
Since every word in CR prompts is important, I thought this was significant.

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Re: In order to raise revenue, the federal government planned a [#permalink]

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14 Jul 2017, 12:28
chetan2u wrote:
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. Which of the following, if true, would most contribute to an explanation of the economists’ projections?

A. Tax amnesty programs are only successful if they are widely publicized.
out of context

B. Most people who honestly pay their state tax are equally honest in paying their federal tax.
again out of context.. we are looking at a relationship between defaulters at federal and state level

C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.
this would rather lead to opposite of economists projection

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.
out of context

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.
CORRECT...this is the difference we are looking for
ans E

The stem tells us that FT < ST , This was projected,

which means people paid more ST than FT

In E) it tells that many people didnt paid the ST, then how does it strengthen the argument?

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Re: In order to raise revenue, the federal government planned a [#permalink]

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15 Jul 2017, 08:25
Merged topics. Please, search before posting questions!
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Re: In order to raise revenue, the federal government planned a [#permalink]

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12 Nov 2017, 01:39
Hi,
mikemcgarry,
Would request your help with this one.

E states that "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". Is it wrong to assume here that the federal tax delinquents were unwilling to pay because of the high penalty and now since there is no penalty, they would instead end up paying it ?

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Re: In order to raise revenue, the federal government planned a [#permalink]

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13 Nov 2017, 11:19
Poorvasha wrote:
Hi,
mikemcgarry,
Would request your help with this one.

E states that "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". Is it wrong to assume here that the federal tax delinquents were unwilling to pay because of the high penalty and now since there is no penalty, they would instead end up paying it ?

Dear Poorvasha,

I'm happy to respond.

(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.

We are told that "state tax delinquents fail to pay state tax because of an oversight," this is, a mistake. These people were intending to pay, and just made a mistake, overlooking their state taxes. The word "oversight" connotes unintentionality: these people failed to pay by accident: this suggests that many would like to rectify that accident and do what they previously unintentionally overlooked.

By contrast, (E) suggest that "most federal tax delinquents . . . fail to pay state tax because of . . . a decision not to pay." That's different. These people did not make a mistake or fail to pay by accident. These people made a conscious decision not to pay. This decision would not have been based on the penalties for lateness, because these people made the decision before anything was late. We don't really know why they so consciously chose not to pay--maybe sudden poverty, maybe because their income was illegally gained, etc. The decision may well be rooted in some aspect of their lives, and the presence or absence of the late penalties is not going to change those life circumstances.

Does all this make sense?
Mike
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Re: In order to raise revenue, the federal government planned a   [#permalink] 13 Nov 2017, 11:19

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