pb_india wrote:
Aroca County’s public schools are supported primarily by taxes on property. The county plans to eliminate the property tax and support schools with a new three percent sales tax on all retail items sold in the county. Three percent of current retail sales is less than the amount collected through property taxes, but implementation of the plan would not necessarily reduce the amount of money going to Aroca County public schools, because ______.
Which if the following, if true, most logically completes the argument?
(A) many Aroca County residents have already left the county because of its high property taxes
(B) a shopping mall likely to draw shoppers from neighboring counties is about to open in Aroca County
(C) at least some Aroca County parents are likely to use the money they will save on property taxes to send their children to private schools not funded by the county
(D) a significant proportion of parents of Aroca County public school students do not own their homes and consequently do not pay property taxes
(E) retailers in Aroca County are not likely to absorb the sales tax by reducing the pretax price of their goods
OFFICIAL EXPLANATION :-
Answer Explanation :-
Reasoning What additional information would provide a reason to believe that the county schools will not lose out on funding if the new sales tax is implemented? We are told that the sales tax would generate less money than the property tax does based on current retail sales. But if retail sales increase enough, the sales tax may end up generating even more money than the property tax does. Consequently, more money may be available for the schools. Therefore, look for an answer option suggesting that retail sales in the county will increase significantly.
A However many residents have left the county, the given information states that property tax still generates more money than the sales tax would generate based on current retail sales. Therefore this answer option gives no reason to believe that switching to the sales tax would reduce funding for the schools.
B Correct. A new shopping mall that draws shoppers from neighboring counties would likely increase Aroca County’s retail sales, generating more tax money for the schools.
C If fewer parents use the public schools, the schools may be able to cut spending and have more money left over, but that does not mean the schools will get as much money from the sales tax as they currently do from the property tax.
D Even if many parents rent rather than own their homes and thus do not pay the property tax themselves, presumably somebody does. Who pays the tax does not affect the total amount collected and is therefore irrelevant to the argument.
E This suggests that the sales tax would lead to higher after-tax retail prices, which would probably reduce retail sales and hence result in even less tax revenue for the schools—contrary to the conclusion drawn in the argument.