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V10-16

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D
Joined: 04 Dec 2002
Posts: 15958

Kudos [?]: 29333 [0], given: 5290

Location: United States (WA)
GMAT 1: 750 Q49 V42
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V10-16 [#permalink]

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New post 17 Aug 2015, 11:20
00:00
A
B
C
D
E

Difficulty:

  25% (medium)

Question Stats:

79% (00:52) correct 21% (00:53) wrong based on 48 sessions

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Politician: In order to reduce our state’s budget deficit, we should lower corporate taxes on businesses that operate within the state. If businesses have lower taxes, they will use their increased profits to hire more workers, which will increase the amount of income taxes that the state collects.

Which of the following is an assumption the politician makes in his argument?


A. The reduction in the amount of corporate taxes collected by the state will be less than the increase in the amount of income taxes collected by the state
B. Businesses that hire more workers are eligible for a tax credit from the state
C. The minimum wage in the state is lower than average when compared to other states in the country
D. The businesses affected by the lower taxes will favor returning their increased profits to their shareholders rather than reinvesting in their operations
E. The state’s budget deficit has grown this year when compared to last year
[Reveal] Spoiler: OA

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Kudos [?]: 29333 [0], given: 5290

Expert Post
Founder
Founder
User avatar
D
Joined: 04 Dec 2002
Posts: 15958

Kudos [?]: 29333 [0], given: 5290

Location: United States (WA)
GMAT 1: 750 Q49 V42
GMAT ToolKit User CAT Tests
Re V10-16 [#permalink]

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New post 17 Aug 2015, 11:20
Official Solution:


Politician: In order to reduce our state’s budget deficit, we should lower corporate taxes on businesses that operate within the state. If businesses have lower taxes, they will use their increased profits to hire more workers, which will increase the amount of income taxes that the state collects.

Which of the following is an assumption the politician makes in his argument?


A. The reduction in the amount of corporate taxes collected by the state will be less than the increase in the amount of income taxes collected by the state
B. Businesses that hire more workers are eligible for a tax credit from the state
C. The minimum wage in the state is lower than average when compared to other states in the country
D. The businesses affected by the lower taxes will favor returning their increased profits to their shareholders rather than reinvesting in their operations
E. The state’s budget deficit has grown this year when compared to last year


(A) Correct. The politician says that the policy will increase the overall amount of tax revenue collected. Since the state will be collecting less in corporate taxes, it has to make up this difference through individual taxes.

(B) This answer choice is irrelevant.

(C) This answer choice is irrelevant.

(D) This would weaken the conclusion, since it indicates that the businesses that save on taxes will not hire more workers, but instead return their increased profits to their shareholders.

(E) This answer choice is irrelevant.


Answer: A
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Re: V10-16 [#permalink]

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New post 11 May 2016, 07:28
I think this the explanation isn't clear enough, please elaborate.

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Concentration: Strategy, Social Entrepreneurship
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Re: V10-16 [#permalink]

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New post 09 Nov 2017, 01:25
Why is D wrong can you elaborate on this

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Re: V10-16   [#permalink] 09 Nov 2017, 01:25
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