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

It's true that the tax didn't turn out to be as equitable as its proponents hoped -- it almost certainly DID cause economic hardship for the workers who lost their jobs.

Be careful about paraphrasing (E), though -- you've actually changed a key component of the answer choice. Perhaps, in some situations, "an" equitable tax is one in which all people pay, as you've said. Unfortunately, (E) goes much further than this:

The "tax the rich" solution outlined in the passage didn't work out too well in this particular case. But can we conclude from this that the ONLY tax that is equitable is one that is evenly distributed over the entire population?

Nope, that goes way too far. Perhaps there are other ways of creating an equitable tax. And perhaps a tax that is evenly distributed (e.g., a millionaire and a minimum wage worker would both pay the same amount) isn't that equitable either.

Looking at the exact language of (E), it's clear that this option isn't supported by the passage.

I hope that helps!

Hi all,

Is this an inference question or a conclusion question?

Hi GMATNinja: I rejected option D based on two reasons (below). Would appreciate if you could comment and highlight gaps (if any) in my reasoning.

FIRST - We are not given any information on the segmentation of buyers of new luxury boats in the paragraph. So, we can't infer if such boats were largely bought by people who were not wealthy.

SECOND - If the information provided in option D is correct, it directly contradicts with the information given in the passage i.e. because the admittedly heavy tax burden would fall only on wealthy people. As per option D, burden may fall on people who are not wealthy (if they continue to buy new luxury boats even after new tax is imposed).

You're on the right track! We explained (D) here, and your reasoning is along the same lines.

Great username, btw -- mmm, dosas.

It's fascinating how I nearly reached the end of the discussion on this question looking for someone who would raise / discuss point E in detail because the "out of scope" reasoning didn't seem to be satisfying, and as I'm about to request you for the same, I find this gem of an explanation.

Thank you GMATNinja for not sticking us with the "this sounds awkward" or "this is irrelevant / out of scope" reasonings

You are very welcome! Thank you for the kind words. It's lovely to know that someone besides the original poster is reading this stuff.

The information that 20% of the workers employed by manufacturers of luxury boats lost their jobs as a direct result of the tax on sales of new luxury boats, if true, most strongly supports option (B) that 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. This option suggests that while the tax may generate revenue for the government, the cost of imposing the tax should also include the impact it has on workers. If the yearly total revenue from the tax does not exceed the total yearly tax-revenue decrease resulting from the loss of jobs, then the tax is not worthwhile. The argument does not provide support for options (A), (C), (D), or (E).

Proponents of the recently introduced tax on sales of new luxury boats had argued that a tax of this sort would be an equitable way to increase government revenue because the admittedly heavy tax burden would fall only on wealthy people and neither they nor anyone else would suffer any economic hardship. In fact, however, 20 percent of the workers employed by manufacturers of luxury boats have lost their jobs as a direct result of this tax.

The information given, if true, most strongly supports which of the following?

Our mantra in The inference question: look for an answer that is supported by the information in the argument.


(A) The market for luxury boats would have collapsed even if the new tax on luxury boats had been lower.
In the passage, the author discussed the tax on sales of new luxury boats to increase government revenue. But, IF the new tax on Luxury boats had been
lower, The market for luxury boats would have collapsed or wouldn't have collapsed. We don't know. that is the reason (a) is out.

(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.(b) is loner correct answer choice

(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.
the passage discussed sales of new luxury boats, but it doesn't discuss who can afford to buy or not. so it is out

(D) Before the tax was instituted, luxury boats were largely bought by people who were not wealthy.
Do we really know what happened before tax was instituted, Does this information given the in the passage? No, that's why(D) is out.

(E) Taxes can be equitable only if their burden is evenly distributed over the entire population.
That is good ideas, but it has nothing to do with the information in the passage.