It is currently 17 Oct 2017, 00:28

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

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

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:

Hide Tags

1 KUDOS received
VP
VP
User avatar
D
Joined: 14 Nov 2016
Posts: 1153

Kudos [?]: 1167 [1], given: 411

Location: Malaysia
GMAT ToolKit User Premium Member CAT Tests
Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 29 May 2017, 06:09
1
This post received
KUDOS
13
This post was
BOOKMARKED
00:00
A
B
C
D
E

Difficulty:

  55% (hard)

Question Stats:

69% (01:40) correct 31% (01:58) wrong based on 748 sessions

HideShow timer Statistics

The Official Guide for GMAT Review 2018

Practice Question
Question No.: CR634
Page:

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?

(A) The market for luxury boats would have collapsed even if the new tax on luxury boats had been lower.
(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.
(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.
(D) Before the tax was instituted, luxury boats were largely bought by people who were not wealthy.
(E) Taxes can be equitable only if their burden is evenly distributed over the entire population.
[Reveal] Spoiler: OA

_________________

"Be challenged at EVERY MOMENT."

“Strength doesn’t come from what you can do. It comes from overcoming the things you once thought you couldn’t.”

"Each stage of the journey is crucial to attaining new heights of knowledge."

Rules for posting in verbal forum | Please DO NOT post short answer in your post!

Kudos [?]: 1167 [1], given: 411

1 KUDOS received
BSchool Forum Moderator
User avatar
D
Status: Aiming MBA
Joined: 18 Jul 2015
Posts: 2489

Kudos [?]: 784 [1], given: 64

Location: India
Concentration: Healthcare, Technology
GMAT 1: 710 Q50 V35
GPA: 3.65
WE: Information Technology (Health Care)
Premium Member Reviews Badge
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 29 May 2017, 07:10
1
This post received
KUDOS
Proponents said this tax system will help increase tax revenue. In reality, workers have lost their jobs. So, does that mean the gains will offset the losses? We need to find something of this form.

(A) The market for luxury boats would have collapsed even if the new tax on luxury boats had been lower. --> Hypothetical condition is OFS.

(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. Yes, so benefits will be only when gains will offset the losses.

(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. --> Whether they have support is OFS. we are concerned whether government will be able to increase revenue.

(D) Before the tax was instituted, luxury boats were largely bought by people who were not wealthy. And now? We don't know. Don't try to break the premise.

(E) Taxes can be equitable only if their burden is evenly distributed over the entire population. --> Again, OFS. We are concerned about increasing government revenues.
_________________

V21 ---> V40!

Kudos [?]: 784 [1], given: 64

Intern
Intern
avatar
B
Joined: 13 Apr 2017
Posts: 22

Kudos [?]: 10 [0], given: 37

Location: India
Concentration: Finance, Marketing
GRE 1: 310 Q164 V146
WE: Analyst (Computer Software)
GMAT ToolKit User
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 29 Jun 2017, 19:49
B for me

it took me 50 sec to understand B, but finally found that Only this option is relevant
_________________

princeton-1: 470
princeton-2: 590
princeton-3: 460
princeton-4: 610
gmat club cat: 620
manhatten-1: 680
veritas: 650
princeton-5: 700
princeton-6: 610
manhatten-2: 740
kaplan: 750
princeton-7: 700
manhatten-3: 780
gmat prep 1: 770
princeton-8: 680
manhatten-4: 780
princeton-9: 710
gmat prep 2: 740
manhatten-5: 780
princeton-10: 710

Kudos [?]: 10 [0], given: 37

VP
VP
User avatar
G
Status: Learning
Joined: 20 Dec 2015
Posts: 1069

Kudos [?]: 69 [0], given: 532

Location: India
Concentration: Operations, Marketing
GMAT 1: 670 Q48 V36
GRE 1: 314 Q157 V157
GPA: 3.4
WE: Manufacturing and Production (Manufacturing)
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 29 Jun 2017, 22:16
B is the only valid answer as it says that the government is going to benefit only if revenue is greater than the losses .
_________________

We are more often frightened than hurt; and we suffer more from imagination than from reality

Kudos [?]: 69 [0], given: 532

Manager
Manager
avatar
B
Joined: 01 Feb 2015
Posts: 54

Kudos [?]: 5 [0], given: 36

Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 29 Jun 2017, 23:23
Can someone explain the reasoning behind it please?

Please state the premise and the conclusion as well.

Sent from my Redmi Note 3 using GMAT Club Forum mobile app

Kudos [?]: 5 [0], given: 36

Manager
Manager
avatar
S
Joined: 24 Dec 2015
Posts: 65

Kudos [?]: 13 [0], given: 204

Location: India
Concentration: Marketing, Technology
GMAT 1: 710 Q50 V35
GPA: 3.8
WE: Engineering (Computer Software)
GMAT ToolKit User Reviews Badge
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 01 Jul 2017, 17:56
I'm sorry, I couldn't understand what exactly are we trying to support here. Is it that Tax was bad or good?

Kudos [?]: 13 [0], given: 204

Manager
Manager
avatar
B
Joined: 20 Aug 2016
Posts: 59

Kudos [?]: 10 [0], given: 13

Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 01 Jul 2017, 23:48
This is a must be true ' inference' question. So we need a statement that must be true based on the argument above. Only B can be inferred as abhimahna has already explained.

Sent from my XT1562 using GMAT Club Forum mobile app

Kudos [?]: 10 [0], given: 13

Intern
Intern
User avatar
B
Status: Self Redemption
Affiliations: Open
Joined: 22 Jul 2014
Posts: 13

Kudos [?]: 9 [0], given: 67

Umar: Firdaus
Premium Member
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 02 Jul 2017, 03:01
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 (Derived statement - Intermediate conclusion based on counter premise -->) 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 ( This is the conclusion - main point advocated by the author)

Inference : if these statements are true then following must also be true.
Tax will increase gov revenue only if tax gained from sale of boats will be greater than tax lost as a result of loss of workers job.

Kudos [?]: 9 [0], given: 67

Expert Post
GMAT Club Verbal Expert
User avatar
B
Joined: 20 Nov 2016
Posts: 158

Kudos [?]: 87 [0], given: 34

Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 10 Jul 2017, 14:54
Firdaus wrote:
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 (Derived statement - Intermediate conclusion based on counter premise -->) 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 ( This is the conclusion - main point advocated by the author)

Inference : if these statements are true then following must also be true.
Tax will increase gov revenue only if tax gained from sale of boats will be greater than tax lost as a result of loss of workers job.

Thanks Firdaus for the explanation!

If anyone still has specific questions, feel free to use the request verbal experts' reply button.
_________________

www.gmatninja.com

Subscribe to GMAT Question of the Day: E-mail | RSS

Kudos [?]: 87 [0], given: 34

Manager
Manager
avatar
B
Joined: 19 Mar 2012
Posts: 131

Kudos [?]: 28 [0], given: 368

GMAT ToolKit User Premium Member
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 12 Jul 2017, 19:09
How is the correct option inferred from the given argument. It seems like new information in the context of this argument.
Inference answers can be :
a. Paraphrased of some part or entire stimulus
b. Combination of two or more premises
And option B does not seem to be either.
_________________

Feel Free to Press Kudos if you like the way I think :).

Kudos [?]: 28 [0], given: 368

Manager
Manager
avatar
B
Joined: 19 Mar 2012
Posts: 131

Kudos [?]: 28 [0], given: 368

GMAT ToolKit User Premium Member
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 12 Jul 2017, 19:11
hazelnut wrote:
The Official Guide for GMAT Review 2018

Practice Question
Question No.: CR634
Page:

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?

(A) The market for luxury boats would have collapsed even if the new tax on luxury boats had been lower.
(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.
(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.
(D) Before the tax was instituted, luxury boats were largely bought by people who were not wealthy.
(E) Taxes can be equitable only if their burden is evenly distributed over the entire population.


How is the correct option inferred from the given argument. It seems like new information in the context of this argument.
Inference answers can be :
a. Paraphrased of some part or entire stimulus
b. Combination of two or more premises
And option B does not seem to be either.
_________________

Feel Free to Press Kudos if you like the way I think :).

Kudos [?]: 28 [0], given: 368

Manager
Manager
avatar
B
Joined: 05 Nov 2014
Posts: 109

Kudos [?]: 10 [0], given: 84

Location: India
Concentration: Strategy, Operations
GMAT 1: 580 Q49 V21
GPA: 3.75
Reviews Badge
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 12 Jul 2017, 23:52
Error Analysis:
The argument says that wealthy individuals pay tax to the government and the government increases its revenue. But it says that 20% of the workers are removed from their job.

So the government in total would end up in gain only if total revenue that the government generate is greater than the loss / compensation resulting from removing 20% of the workers.

Therefore the answer is Option B.

Kudos [?]: 10 [0], given: 84

Intern
Intern
avatar
B
Joined: 21 Dec 2014
Posts: 8

Kudos [?]: 5 [0], given: 3

Location: Bangladesh
Concentration: Marketing, Sustainability
GPA: 3.89
CAT Tests
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 20 Jul 2017, 11:12
how can one understand that the issue discussed is about government revenue? why D is incorrect?

Kudos [?]: 5 [0], given: 3

Expert Post
GMAT Club Verbal Expert
User avatar
G
Status: GMAT and GRE tutor
Joined: 13 Aug 2009
Posts: 1020

Kudos [?]: 1554 [0], given: 399

Location: United States
GMAT 1: 780 Q51 V46
GMAT 2: 800 Q51 V51
GRE 1: 340 Q170 V170
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 21 Jul 2017, 16:59
Mahamudul608 wrote:
how can one understand that the issue discussed is about government revenue? why D is incorrect?

According to the passage,

  • the new tax on sales of new luxury boats would "increase government revenue"
  • "20 percent of the workers employed by manufacturers of luxury boats have lost their jobs as a direct result of this tax"

Quote:
(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.

Based solely on the information in the passage, we cannot assume that the government would lose any tax revenue as a result of the jobs lost by employees of luxury boat manufacturers. However, choice (B) does not necessarily say that there WILL be a tax-revenue decrease resulting from the workers' loss of jobs. Instead, choice (B) says that IF there is a tax-revenue decrease resulting from the workers' loss of jobs, the new boat tax will only produce a net gain for the government IF the revenue gained from the tax exceeds the possible revenue decrease resulting from the workers' loss of jobs.

In other words, the government should see an increase in tax revenue because of the new boat tax. But what if, for whatever reason, the new boat tax causes a DECREASE in tax revenue (i.e. resulting from workers' loss of jobs)? If that decrease exceeds the increase from the boat tax, the government would actually see a net LOSS in tax revenue. Thus, statement (B) is strongly supported by the information in the passage.

Quote:
(D) Before the tax was instituted, luxury boats were largely bought by people who were not wealthy.

The information in the passage does not necessarily support choice (D). Again, all we know is that the government should expect to receive new tax revenue from the boat tax and that 20 percent of the workers employed by manufacturers of luxury boats have lost their jobs as a result of the new boat tax.

Why did they lose their jobs? Perhaps some people who could have afforded a luxury boat without the tax could not afford a luxury boat with the tax, causing sales and, thus, production of luxury boats to decline. Regardless of whether this theory is true, we cannot assume that the people who decided not to buy luxury boats because of the tax were not wealthy. Even if we could, we would not be able to assume that luxury boats were LARGELY bought by people who were not wealthy before the tax was instituted. There is nothing in the passage to support choice (D), so it must be eliminated.
_________________

GMAT Club Verbal Expert | GMAT/GRE tutor at www.gmatninja.com | GMAT blog |food blog | Friendly warning: I'm really bad at PMs

Beginners' guides to GMAT verbal
Reading Comprehension | Critical Reasoning | Sentence Correction

SC & CR Questions of the Day (QOTDs), featuring expert explanations
All QOTDs | Subscribe via email | RSS

Need an expert reply?
Hit the request verbal experts' reply button -- and please be specific about your question. Feel free to tag @GMATNinja and @GMATNinjaTwo in your post.

Sentence Correction articles & resources
How to go from great (760) to incredible (780) on GMAT SC | That "-ing" Word Probably Isn't a Verb | That "-ed" Word Might Not Be a Verb, Either | No-BS Guide to GMAT Idioms | "Being" is not the enemy | WTF is "that" doing in my sentence?

Reading Comprehension, Critical Reasoning, and other articles & resources
All GMAT Ninja articles on GMAT Club | Using LSAT for GMAT CR & RC |7 reasons why your actual GMAT scores don't match your practice test scores | How to get 4 additional "fake" GMAT Prep tests for $29.99... in any section order

YouTube verbal webinars:
"Next-level" GMAT pronouns | Uses of "that" on the GMAT | Parallelism and meaning

Kudos [?]: 1554 [0], given: 399

Senior Manager
Senior Manager
avatar
G
Joined: 04 Sep 2016
Posts: 314

Kudos [?]: 64 [0], given: 190

Location: India
WE: Engineering (Other)
Premium Member CAT Tests
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 21 Jul 2017, 18:20
Hi GMATNinjaTwo
Are you in line with Firdaus s explanation.
As per me there is no main conclusion in this argument and the last sentence is
a premise supporting the first statement.
Let me know your views :-)
WR,
Arpit
_________________

Press kudos if you liked this post

Kudos [?]: 64 [0], given: 190

Expert Post
GMAT Club Verbal Expert
User avatar
B
Joined: 20 Nov 2016
Posts: 158

Kudos [?]: 87 [0], given: 34

Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 21 Jul 2017, 18:28
adkikani wrote:
Hi GMATNinjaTwo
Are you in line with Firdaus s explanation.
As per me there is no main conclusion in this argument and the last sentence is
a premise supporting the first statement.
Let me know your views :-)
WR,
Arpit

I agree that the passage does not have a main conclusion. It is an inference question, and we are looking for a statement that is most strongly supported by the statements in the passage. Thanks for asking!
_________________

www.gmatninja.com

Subscribe to GMAT Question of the Day: E-mail | RSS

Kudos [?]: 87 [0], given: 34

Intern
Intern
avatar
B
Status: Striving to get that elusive 740
Joined: 04 Jun 2017
Posts: 48

Kudos [?]: 11 [0], given: 24

GMAT 1: 690 Q49 V35
GPA: 3.7
WE: Analyst (Consulting)
Reviews Badge
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 25 Jul 2017, 09:50
I think Option B is not very well formatted as it compares "yearly total revenue" with "total of any yearly tax-revenue".

Experts need help..

Kudos [?]: 11 [0], given: 24

Expert Post
GMAT Club Verbal Expert
User avatar
G
Status: GMAT and GRE tutor
Joined: 13 Aug 2009
Posts: 1020

Kudos [?]: 1554 [0], given: 399

Location: United States
GMAT 1: 780 Q51 V46
GMAT 2: 800 Q51 V51
GRE 1: 340 Q170 V170
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 30 Jul 2017, 10:07
gmati3 wrote:
I think Option B is not very well formatted as it compares "yearly total revenue" with "total of any yearly tax-revenue".

Experts need help..

Option (B) refers to the "yearly total revenue" produced by the new tax.

We are told that 20 percent of the workers employed by manufacturers of luxury boats have lost their jobs as a direct result of this new tax. This loss of jobs MAY result in a decrease in tax revenue, but we can't be sure based on the information given. Perhaps none of those workers were paying taxes in the first place, and, thus, the loss of jobs will have no effect on tax revenue. Or perhaps those workers found other jobs and will end up paying the same amount in taxes.

However, maybe some or all of those workers who lost their jobs were paying taxes each year, and now the government is not going to get that money. If that's the case, we have to add up ALL of the resulting decreases and compare the total amount to the "yearly total revenue" produced by the new tax. If the yearly total revenue produced by the new tax is greater than "the total of any yearly tax-revenue decrease resulting from the workers' loss of jobs", then the new tax will produce a net gain in tax revenue for the government.

I hope that helps!
_________________

GMAT Club Verbal Expert | GMAT/GRE tutor at www.gmatninja.com | GMAT blog |food blog | Friendly warning: I'm really bad at PMs

Beginners' guides to GMAT verbal
Reading Comprehension | Critical Reasoning | Sentence Correction

SC & CR Questions of the Day (QOTDs), featuring expert explanations
All QOTDs | Subscribe via email | RSS

Need an expert reply?
Hit the request verbal experts' reply button -- and please be specific about your question. Feel free to tag @GMATNinja and @GMATNinjaTwo in your post.

Sentence Correction articles & resources
How to go from great (760) to incredible (780) on GMAT SC | That "-ing" Word Probably Isn't a Verb | That "-ed" Word Might Not Be a Verb, Either | No-BS Guide to GMAT Idioms | "Being" is not the enemy | WTF is "that" doing in my sentence?

Reading Comprehension, Critical Reasoning, and other articles & resources
All GMAT Ninja articles on GMAT Club | Using LSAT for GMAT CR & RC |7 reasons why your actual GMAT scores don't match your practice test scores | How to get 4 additional "fake" GMAT Prep tests for $29.99... in any section order

YouTube verbal webinars:
"Next-level" GMAT pronouns | Uses of "that" on the GMAT | Parallelism and meaning

Kudos [?]: 1554 [0], given: 399

Expert Post
Veritas Prep GMAT Instructor
User avatar
G
Joined: 16 Oct 2010
Posts: 7668

Kudos [?]: 17320 [0], given: 232

Location: Pune, India
Re: Proponents of the recently introduced tax on sales of new luxury boats [#permalink]

Show Tags

New post 16 Oct 2017, 12:37
hazelnut wrote:
The Official Guide for GMAT Review 2018

Practice Question
Question No.: CR634
Page:

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?

(A) The market for luxury boats would have collapsed even if the new tax on luxury boats had been lower.
(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.
(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.
(D) Before the tax was instituted, luxury boats were largely bought by people who were not wealthy.
(E) Taxes can be equitable only if their burden is evenly distributed over the entire population.


Responding to the pm:

The argument has no conclusion. It just gives you premises. You are asked to find the conclusion.
Proponents had argued that it is a way to increase Govt revenue by increasing taxes. But it is also given that 20% of workers have lost their job.

So whether actually the overall tax collection increased or decreased, we don't know. Since 20% workers lost their job, there might have been a dip in collection too. So whether the increase offset the dip, we don't know.

Hence (B) is correct.
_________________

Karishma
Veritas Prep | GMAT Instructor
My Blog

Get started with Veritas Prep GMAT On Demand for $199

Veritas Prep Reviews

Kudos [?]: 17320 [0], given: 232

Re: Proponents of the recently introduced tax on sales of new luxury boats   [#permalink] 16 Oct 2017, 12:37
Display posts from previous: Sort by

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

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.