The graduated income tax is the most progressive form of tax because

Question

The graduated income tax is the most progressive form of tax because people who make less money pay a lower percentage of their earnings in taxes, while those who earn more pay a higher percentage. The sales tax is more regressive because it is collected when people spend money rather than earn it. Since the same percentage tax is collected from everyone, regardless of income, and because people who make less money must spend a larger percentage of their income on necessities, the effective sales tax rate that people pay actually increases as they earn less money. Therefore, in order to be fair to all of its citizens, this state should increase income tax rates and eliminate the sales tax.

The conclusion drawn above is based on the assumption that

The conclusion drawn above is based on the assumption that

(A) a progressive tax is one that collects more money from people who make more money.
(B) a flat income tax would be fairer to all taxpayers because everyone would pay the same rate regardless of income.
(C) a higher sales tax rate actually encourages people to save more of their income because they aren’t taxed until they spend the money.
(D) a regressive tax hits poor people the hardest.
(E) sales taxes are collected on all purchases, including necessities such as food and clothing.

Gknight5603 · Answer

how is negating E, destroying the conclusion??

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reii1998 · Answer

I chose D, but now I understood that E is correct because if salex tax was to be different for example very small percentage on necessary goods then people with less income would not be paying a high percentage of their income in taxes

SecretFlight · Answer

I don't understand how the answer should be E. Can you please provide the explanation for it.
Thank you

AllisonBell · Answer

This argument can be broken into premises, an intermediate conclusion, and a conclusion. To help clear up the rationale for answer E, let’s focus on the parts about the sales tax.

Premises:  
Collected when money is spent, not earned → regressive 
+
Same % collected from everyone
+
Less money → larger % of income on necessities

I  ntermediate conclusion  : Sales tax rate increases as people earn less money

Conclusion:   State should eliminate sales tax

It’s worth pausing to make sure we understand. To take a simple example, if Person A makes $100 weekly, and Person B makes $1,000 weekly, and the “necessities” cost an average of $50 per person weekly, then Person A is paying 50% of their income on necessities, while Person B is paying 5%. If they are each paying the same sales tax rate (let’s say 10%), then Person A is paying 5% of their weekly income in sales tax, while person B is paying .5%. This is the opposite structure of the “progressive” income tax rate described in the first sentence.

The conclusion says, in part, that eliminating the sales tax would be fair to all citizens. This conclusion makes a lot of assumptions — what is the definition of “fair,” for example? But we need to stay open minded, and look for an answer that has to be true in order for eliminating the sales tax to be considered fair.

Let’s start with  (E) , the correct answer in question.

The argument for eliminating the sales tax rests on the idea that people making different amounts of money have to spend a base amount on necessities, and therefore they are forced into a tax structure like the example I described above, where Person A makes less money but pays a higher percentage of their income in sales tax. However, if there is no sales tax on necessities, then this rationale provided for the conclusion collapses. Person A and Person B can purchase the necessities and pay 0% sales tax, avoiding the scenario of a person with lower income having to pay a higher “effective” sales tax.

Let’s look at the other answers:

(A)  This is a twist in wording from the premises, which describe a progressive tax as taking a greater percentage of money from people who make more money. Since that is already clearly stated in the text, this is not something that needs to be added to the argument in order to make it true. (In fact, it would just make it more confusing!).
 (B)  This contradicts the conclusion. Assumptions should always help the argument.
 (C)  It’s not clear how savings would impact people with lower or higher income differently, or how that would interact with the rationale for this argument. We would have to make too many assumptions to choose this answer.
 (D)  This is already stated in the argument, so this is what we would call a “premise booster.” Assumptions must be unstated.

I hope this is helpful! Happy to answer follow-up questions. If you’re looking to dig deeper into assumption questions, ManhattanPrep’s  Free Trial Classes  have a great foundational lesson on the building blocks of this question type!

Happy studying,
Ally Bell
ManhattanPrep Instructor

guddo · Answer

The graduated income tax is the most progressive form of tax because people who make less money pay a lower percentage of their earnings in taxes, while those who earn more pay a higher percentage. The sales tax is more regressive because it is collected when people spend money rather than earn it. Since the same percentage tax is collected from everyone, regardless of income, and because people who make less money must spend a larger percentage of their income on necessities, the effective sales tax rate that people pay actually increases as they earn less money. Therefore, in order to be fair to all of its citizens, this state should increase income tax rates and eliminate the sales tax.

The conclusion drawn above is based on the assumption that

The conclusion drawn above is based on the assumption that

The argument concludes that the state should eliminate the sales tax and increase income tax rates. The key reasoning is that poorer people spend a larger percentage of their income on necessities, so the sales tax creates a heavier effective burden on them.  For that reasoning to work , necessities must actually be subject to the sales tax. Otherwise, spending more income on necessities would not show that poorer people pay a higher effective sales tax rate.

(A) a progressive tax is one that collects more money from people who make more money.

Wrong. The argument defines a progressive tax by percentage of income paid, not simply by total dollars paid.

(B) a flat income tax would be fairer to all taxpayers because everyone would pay the same rate regardless of income.

Wrong. This goes against the argument. The argument favors a graduated income tax, not a flat income tax.

(C) a higher sales tax rate actually encourages people to save more of their income because they aren’t taxed until they spend the money.

Wrong. This is about saving behavior, not about whether the sales tax unfairly burdens lower-income people.

(D) a regressive tax hits poor people the hardest.

Tempting, but too general. The argument already explains why a regressive tax burdens lower-income people more. The missing assumption is more specific: the sales tax must apply to the necessities on which lower-income people spend much of their income.

(E) sales taxes are collected on all purchases, including necessities such as food and clothing.

Correct. If necessities were not taxed, then the fact that lower-income people spend more of their income on necessities would not support the claim that they pay a higher effective sales tax rate. So the argument depends on the assumption that necessities are included in the sales tax base.

Answer: (E)

The graduated income tax is the most progressive form of tax because

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The graduated income tax is the most progressive form of tax because

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