Property taxes are typically set at a flat rate per $1,000 of official

OFFICIAL EDXPLANATION

If most property values have dropped significantly, but some have risen slightly, a reassessment should occur (since values have changed at different rates) but is unlikely (since it will not benefit the government). Thus choice D describes the required situation and is the best answer.

According to the passage, choices A and E describe the situations in which there is no need for a reassessment, since change has occurred uniformly. Similarly, choices B and C both describe situations in which a reassessment should occur, and is likely to, since the government will benefit.

two statements from the argument
stmt1: Reassessments are mad when property values
change at differential rates

From stmt1,
change at differential rates==> increase as well as decrease of property rates


stmt2: Reassessments occur when they benefit government to increase total tax revenue

From stmt2,
to increase total tax revenue, most property values must increase. the question is when reassessment needed but it is not done by government, then it implies most property values decrease.
D clearly explains of most property value decreaese and some rise to prove stmt1 that reassessments are needed.

A. no differential rates so no reassessments needed

B. no differential rates , all have risen

C. differential rates are there so one condition is met, but most property values risen , then it would benefit government and reassessment would occur ( for us reassessment should not occur)

E. same as A no differential rates so no reassessments needed

"a situation in which a reassessment should occur but is unlikely to do so"

Reassessment should occur when property value changes at differential rates - A & E out
among B,C and D, only D provides a case where new taxes would be lower if reassessment is done. So it is highly unlikely that the reassesment would be done. (reassessments typically occur when they benefit the government).

Hence Ans D it is!

Rates must have increased ununiformly or decreased ununiformly or there should have been increase in certain areas and decrease in other areas. So only B,C & D remain. Reassessment will not occur unless there has been more increase than decrease. So only D stands the test.

Kudos Please... If my post helped.

WE HAVE TO LOOK FOR A SCENARIO WHERE SITUATION DEMANDS REASSESSMENT DUE TO PROPERTY VALUE CHANGES AT DIFFERENTIAL RATES YET GOVERNMENT NOT IMPLEMENTING IT AS IT DOES NOT BENEFIT BUT RATHER LOSES.....

If the statements above are true, which of the following describes a situation in which a reassessment should occur but is unlikely to do so?

Property values have risen sharply and uniformly.NO DIFFERENTIAL FACTOR....HENCE NOT APPLICABLE

Property values have all risen—some very sharply, some less so. GOVERNMENT BENEFITTING AND WILL GO FOR REASSESSMENT

Property values have for the most part risen sharply; yet some have dropped slightly.DIFFERENTIAL RATES ARE THERE BUT GOVERNMENT BENEFITTING AND WILL GO FOR REASSESSMENT

Property values have for the most part dropped significantly; yet some have risen slightly.....DIFFERENTIAL RATES APPLICABLE BUT GOVERNMENT WILL NOT GO FOR REASSESSMENT AS IT WILL BE AT LOSS...

Property values have dropped significantly and uniformly......NO DIFFERENTIAL FACTOR....HENCE NOT APPLICABLE

KUDOS IF YOU PLEASE.....

Karishma I really don't get understand this question at all. In option B, if ALL property values have gone up, why would the government even want to do a re-assessment? Their tax revenues will have all increased! Some help please?

There are two different property values - market value and appraised value

Market value is what changes every day and with every deal - e.g. it could be considered the last transaction value of a fair negotiation not committed under duress. Or it could be the average of last 3 transactions or some such formula etc. It is not fixed.

Property tax taken by the govt cannot be calculated using market value because of the huge short term fluctuations. They use assessed value of a property for a certain period of time, say 2 yrs. They can reassess after 2 yrs and then use that as a base. Or they can choose to reassess when they feel that the market price has moved up/down for the long term etc.

The argument tells you how the govt decides to reassess. The property tax will increase if the reassessed value is higher than previous value. An increase in market value does not increase property tax.

Property taxes are typically set at a flat rate per $1,000 of officially assessed value. Reassessments should be frequent in order to remove distortions that arise when property values change at differential rates. In practice, however, reassessments typically occur when they benefit the government—that is, when their effect is to increase total tax revenue.

If the statements above are true, which of the following describes a situation in which a reassessment should occur but is unlikely to do so?


(A) Property values have risen sharply and uniformly. X
-The passage tells us that reassessments should be done to remove distortions that arise when property values change at DIFFERENTIAL RATES…if the rise is occurring uniformly that’s not the same as differentially

(B) Property values have all risen—some very sharply, some less so.
-‘all risen sharply’ is not differential

(C) Property values have for the most part risen sharply yet some have dropped slightly.
-Why is C incorrect but D isn’t? The answer lies in understaning a key point in the passage: “however, reassessments typically occur when they benefit the government—that is, when their effect is to increase total tax revenue” To ensure fairness, reassessments should not be biased by the motives of government…i.e. the property taxes should be commensurate with the property values …but we know the government is pesky so they only do the reassessment when it benefits…
-so when the property values have risen you can expect the government to do a reassessment
-however, this is not a reassessment that SHOULD occur but is UNLIKELY to do so …the government would have reassessed anyways

(D) Property values have for the most part dropped significantly; yet some have risen slightly.
Correct
-however, this is not a reassessment that SHOULD occur but is UNLIKELY to do so
-the government does not have any incentive to do a reassessment when property values are down …

(E) Property values have dropped significantly and uniformly.
-uniformly is not differentially

(A) Property values have risen sharply and uniformly.
This will make them reaases the situation since it will raise the profit margin for government

(B) Property values have all risen—some very sharply, some less so.
This will lead to revaluation depending on the exact numbers

(C) Property values have for the most part risen sharply yet some have dropped slightly.
Since more no of property has increased than decreased this will significantly raise the profit margin therefore reassesment will be completed

(D) Property values have for the most part dropped significantly; yet some have risen slightly.
Yes this will lead to loss to the government hence will not be revaluvated

(E) Property values have dropped significantly and uniformly.
This will also not make them not reevaluvate
i chose D i have no absolute reason to eleminate E though

Crytiocanalyst E should be eliminated because of the word "uniformly" in the answer choice. the stem states that "Reassessments should be frequent in order to remove distortions that arise when property values change AT DIFFERENTIAL RATES." If property values are dropping uniformly, it does not meet the requirement for it to be reassessed.

Let us first analyze the given argument.
1. Government has fixed tax rate. Suppose, fixed tax rate is $x for every $1,000 of property value.
=> If a property costs $500,000 then as per fixed tax rate government will receive some money as tax revenue (income).
=> Money government would receive is ($500,000 * x)/($1,000) i.e. $500x.
2. Property values change with market value. New property value should be calculated after any change. (Government calculates the property value.)
3. In reality, new property value is not calculated until government makes significant money as tax revenue (income). (IMO probably because government has to invest significant money to conduct the assessments. Thus, government does not carry out the process until it is economically beneficial to it.)

Given the above mentioned details, we have to pick an answer that describes a specific scenario.
Scenario is: Government should conduct the assessment but will not conduct the assessment.

When the government is expected to carry out assessment ?
=> When property values have changed.

When the government, in reality, carries out the assessment ?
=> The government is reluctant to carry out the assessment if it does not have much to gain.
=> Thus government carries out assessment when net output is money as tax revenue.


Let us scan each answer choice one by one.
(A) Property values have risen sharply and uniformly.
This will increase the money as tax revenue to government.
Hence, gov. is expected to carry out the assessment and is likely that gov. would do so.

(B) Property values have all risen—some very sharply, some less so.
Similar to A, this also will increase the money as tax revenue to government.
Hence, gov. is expected to carry out the assessment and is likely that gov. would do so.

(C) Property values have for the most part risen sharply yet some have dropped slightly.
Property values have changed surely, although we do not know what is the net output. Is it gain or loss ?
Hence, gov. is expected to carry out the assessment, and is likely that gov. would do so.

(D) Property values have for the most part dropped significantly; yet some have risen slightly.
Property values have changed so gov. is expected to carry out the assessment.
However, the net output here would be negative because majority of the change is drop - represented by 'significant'.
Only a little has risen.
Hence, gov. is expected to carry out the assessment because values have changed, but may not do so because it net output is not money as tax revenue. CORRECT

(E) Property values have dropped significantly and uniformly.
If property values have dropped then that is a loss making scenario, in which gov. does not have much to gain.
Hence, gov. is NOT expected to carry out the assessment, and is likely that gov. would NOT do so.

­(A) Property values have risen sharply and uniformly.
No distortions; reassessment benefits the government by increasing revenue. Likely to occur.

(B) Property values have all risen—some very sharply, some less so.
Differential changes create distortions; reassessment would increase revenue. Likely to occur.

(C) Property values have for the most part risen sharply yet some have dropped slightly. 
Differential changes create distortions; reassessment would likely increase revenue. Likely to occur.

(D) Property values have for the most part dropped significantly; yet some have risen slightly.
Differential changes create distortions; reassessment would decrease revenue. Unlikely to occur. 

(E) Property values have dropped significantly and uniformly.
No distortions; reassessment would decrease revenue. Not warranted and unlikely to occur. Not about differential changes.­

I misunderstood the question and thought that the reassessment here means revisiting the tax rate. As a result the entire question reverses in meaning. Since then the reassement needs to be done when the property value decreases, to adjust for the decreasing tax revenues. Ended up choosing B.

Leaving this here so that someone else (confused like me) can benefit from this.

The question explicitly mentions tax rate is flat and what's getting reassessed is the official value of the property. Now this would be reassessed only when the market value increases to increase the total tax revenue for the govt. Also, disruptions are required, hence D.

The correct answer is (E). Reassessments typically happen when they benefit government revenues through increased property taxes. In scenario (E), all property values drop significantly and uniformly, thus lowering assessed values and consequently tax revenues. Like interest earned from a Cash ISA, reassessment in this case doesn't financially incentivize the government, making reassessment necessary but unlikely to occur.