Amtown’s public schools are supported primarily by town property taxes

We need an answer choice that explains how the 4% retail tax will be able to generate enough revenue to match the revenue generate from the previous property tax.

(A) provides such an explanation: a new mall, bringing customers from other cities, will lead to more people buying products. Customers will have to pay 4% retail tax and thus enough revenue will be generated so that revenues from sales tax will be at least as high as those from the erstwhile property tax. CORRECT

(B) Fewer residents means fewer people being charged the 4% and presumably less revenue coming from the retail tax. INCORRECT

(C) Does not relate to retail tax.

(D) The neighboring town is irrelevant.

(E) In of itself a Top 10 billing in a magazine does not mean that Amtown can expect a massive influx of money spent on retail. At least nowhere as much as Amtown can expect a surge in revenues from a retail sales, the way it can with the opening of the mall in (A).

Hope that helps .

Amtown’s public schools are supported primarily by town property taxes. The town plans to eliminate the property tax and support schools with a new four-percent sales tax on all retail items sold in town. Four percent of current retail sales is substantially less than the amount currently collected through property taxes, but town planners believe that adopting this plan will not have a negative impact on the funds available for the town’s public schools because ______.

Which of the following most logically completes the argument? WE HAVE TO INCREASE RETAIL SALES SUCH THAT 4 % OF RETAIL SALES COLLECTED AS SALES TAX EXCEEDS THE PROPERTY TAXES, IN FUTURE

A) a new shopping center that will draw shoppers from neighboring towns will open this year in Amtown...WILL INCREASE AMOUNT COLLECTED THROUGH SALES TAX.....CORRECT
b) many Amtown residents are planning to leave town due to high property taxes.....WHY ARE THEY PLANNING TO LEAVE SINCE PROPERTY TAXES ARE BEING ELIMINATED...LET THEM...MORE OVER EVEN IF THEY WERE TO LEAVE AND PROPERTY TAXES WERE TO CONTINUE...SOMEBODY ELSE WOULD HAVE PAID THE SAME.....IRRELEVANT
c) a number of parents who currently send their children to Amtown’s public schools do not pay property taxes....IRRELEVANT.
d) the sales tax in neighboring towns is much higher than four percent......WHAT NEIGHBORING TOWN DOES IS IRRELEVANT
e) Amtown was recently featured in a magazine as one of the top 10 weekend getaways from a nearby city.....THIS WAS A THING OF THE PAST....EVEN WITH THIS, THE Four percent of current retail sales was substantially less than the amount currently collected through property taxes... WE HAVE TO LOOK FOR WHAT IS IN STORE IN FUTURE THAT WILL ENHANCE COLLECTION THROUGH SALES TAX ... INCORRECT

GMATNinja VeritasKarishma

Need your help here. I got this answer right. But here in the first option, how can I assume that the taxes from the excess revenue will cover the costs?

Schools are supported by property taxes.
Plan is to switch to 4% retail sales tax for supporting schools.
4% of Retail sales is less than amount collected through property tax.

town planners believe that adopting this plan will not have a negative impact on the funds available for the town’s public schools because ___

We need to give a reason why switching to 4% retail sales tax may be sufficient for schools. Why the plan may work.

Some reasons come to mind - What if the property tax collected used to be in excess of what is required by schools. We know that the schools were supported by property taxes but were all the property taxes collected used up by the schools? May be not. Perhaps some part of the taxes were used for other purposes.
Alternatively, what if retail sales is expected to see a jump soon? Then the 4% of retail sales may become sufficient for the schools. Note that we don't need to prove beyond doubt that the plan will work. We need to say why the planners believe that the plan will work.

(A) a new shopping center that will draw shoppers from neighboring towns will open this year in Amtown

Correct. This gives a reason why the plan may work. A new shopping centre will open which will draw shoppers from other towns. Hence, the retail sales is likely to increase. The planners believe that this increase in the retail sales and hence the collection will become sufficient for schools.
Push2808

(B) many Amtown residents are planning to leave town due to high property taxes

Doesn't help the plan.

(C) a number of parents who currently send their children to Amtown’s public schools do not pay property taxes.

Irrelevant

(D) the sales tax in neighboring towns is much higher than four percent

Irrelevant

(E) Amtown was recently featured in a magazine as one of the top 10 weekend getaways from a nearby city.

Irrelevant. We are not given that this feature will increase tourist activity and hence retail sales.

Answer (A)