Proponents of the recently introduced tax on sales of new luxury boats

(A) The market for luxury boats would have collapsed even if the new tax on luxury boats had been lower.

How can we infer that? There is no information that talks about the possibility of a “market collapse” for luxury boats. Out of scope. Eliminate.

(B) The new tax would produce a net gain in tax revenue for the government only if the yearly total revenue that it generates exceeds the total of any yearly tax-revenue decrease resulting from the workers' loss of jobs.

the proponents of the recently introduced tax argue that it would be an equitable way to increase government revenue.
If the revenue generated by the government on the taxable income of the workers who lost their jobs as a direct result of this tax is more than the revenue generated by the recently introduced tax, then by no way would the new tax be an equitable way to increase govt. revenue.

Therefore if the info. given in the argument is true, option B must be true. Correct.

(C) Because many people never buy luxury items, imposing a sales tax on luxury items is the kind of legislative action that does not cost incumbent legislators much popular support.
This information is beyond the scope of the argument. Eliminate.

(D) Before the tax was instituted, luxury boats were largely bought by people who were not wealthy.
How can we infer this? There’s no support for this in the argument. Eliminate.


(E) Taxes can be equitable only if their burden is evenly distributed over the entire population.
Out of scope. Eliminate


Vishnupriya
GMAT Verbal SME