Over the past few years, retailers in the town of

Question

Over the past few years, retailers in the town of Statesville have suffered from decreasing sales, largely because increasing numbers of consumers, after seeing items in stock at those retailers' stores, have opted instead to purchase those items on the Internet. As a result, Statesville's local government revenues have been impacted as well. To make up the lost revenue, Statesville's mayor has proposed legislation that would require Internet retailers to charge and remit local sales taxes on all orders shipped to addresses in Statesville, at the same tax rate assessed on purchases in physical stores. If this legislation is enacted, the mayor reasons, Statesville will be able to bring its revenue back up to the level of a few years ago.

All of the following, if true, cast doubt on the mayor's conclusion EXCEPT

All of the following, if true, cast doubt on the mayor's conclusion EXCEPT

(A) Because they do not need to rent or maintain physical showrooms, Internet retailers generally charge substantially lower prices for most items than do physical stores.
 
(B) The vast majority of Statesville's residents have at least one trusted friend or family member who lives in one of the smaller towns surrounding Statesville and whom they would trust to receive their packages.
 
(C) Statesville's retail stores have been consistently considered the best in the county, and consequently draw a lot of shoppers from other towns.
 
(D) Over the next few years, the Statesville area is likely to experience a severe recession, which could reduce consumer spending by as much as 40 percent.
 
(E) Administering the proposed tax will increase the cost of doing business for Internet retailers, who will then pass the increased cost on to consumers in the form of slight markups on the price of merchandise.

petrifiedbutstanding · Accepted Answer

A- Because they do not need to rent or maintain physical showrooms, Internet retailers generally charge substantially lower prices for most items than do physical stores.
 Since they charge substantially lower prices, the tax would also be correspondingly lower. Ergo, Stateville will not return to earning the revenues it did in the past.

B- The vast majority of Statesville's residents have at least one trusted friend or family member who lives in one of the smaller towns surrounding Statesville and whom they would trust to receive their packages.
 So they could ship it to another address and collect it thus avoiding the excess tax.

C- Statesville's retail stores have been consistently considered the best in the county, and consequently draw a lot of shoppers from other towns.
 Therefore, this floating population will remain in their home state and thus not need to pay Statesville.

D- Over the next few years, the Statesville area is likely to experience a severe recession, which could reduce consumer spending by as much as 40 percent.
 Again Internet shopping will take a hit. Ergo, no taxes for SV.

E- Administering the proposed tax will increase the cost of doing business for Internet retailers, who will then pass the increased cost on to consumers in the form of slight markups on the price of merchandise.
 This one's a winner. Since online stores will hike prices, they will pay taxes to Statesville. This may hit online retail ultimately, but that's another argument.

Rock750 · Answer

Official Explanation :

Identify the Question

We are asked to identify choices that “cast doubt on the mayor's conclusion”, so this is a weakening question. Note, however, that the goal of the question is to find the statement that does not weaken the argument.

Deconstruct the Argument

According to the argument, physical retailers in Statesville are losing business to Internet retailers, resulting in a concomitant loss of sales tax revenue for Statesville's government. To address the problem, the mayor of Statesville proposes that the town collect sales tax on all Internet purchases shipped to addresses within the town. If this measure is enacted, the mayor believes, Statesville will be able to bring its tax revenue back up to its previous levels.

State the Goal

The mayor believes that the new tax will restore the town's sales tax revenue to its original level. Therefore, any evidence that the proposed measure will not generate such additional revenue, or will generate less tax revenue than was collected before the advent of the Internet retailers, will weaken the mayor's argument.

Four of the given statements should weaken the mayor's argument; ultimately, we are looking for the one statement that does not.

Work from Wrong to Right

(A) If Internet retailers charge substantially lower prices for merchandise, and Statesville collects sales tax at the same rate used for purchases in physical stores, then Statesville will receive substantially less tax revenue from Internet purchases than it would if those purchases were made in the town's physical stores. This choice therefore weakens the mayor's argument.

(B) If this statement is true, then most residents of Statesville will be able to have Internet purchases shipped to an address outside the town, and will thus not have to pay the new tax. This statement also casts doubt on the mayor's argument.

(C) If shoppers from outside Statesville choose to purchase items on the Internet rather than in Statesville's retail stores, they will not pay the new tax, as those items will not be shipped within the town. (For purchases these customers still do choose to make at Statesville's retail stores, the argument is unaffected.) This choice serves as more evidence that the tax will not generate as much revenue as the mayor believes.

(D) If this statement is true, the total dollar amount of purchases made by Statesville's residents is likely to decrease sharply, resulting in a corresponding decrease in local tax revenue. Therefore, this choice also works against the mayor's argument.

(E) This choice does not give any evidence that local tax revenue will decrease. In fact, if Internet retailers compensate for the increase in their costs by raising the price of merchandise, Statesville's government will receive slightly more tax revenue from its residents' purchases of that merchandise. This choice thus works in favor of the mayor's argument, not against it.

The correct answer is E.

BeckyRobinsonTPR · Answer

On any type of except question it may be helpful not to eliminate answers but to mark each answer with a word based on the question. Since this question is a weaken except question marking each answer on your scratch paper with "weaken," "not" or a "?" will be helpful to keep track of your thinking without having to go through the thinking process of whether an answer is correct or not each time.

One common way to weaken an argument is to introduce a new circumstance which, if true, means that the conclusion to the argument does not necessarily need to be true.

A) weaken. If internet retailers can charge lower prices then the tax money will also be reduced so if this is true, the conclusion does not have to be true.

B) weaken. If people can get the packages outside the city then they will not pay the tax and the city will not recoup its revenue.

C) weaken. If consumers go to the city stores, but still purchase on the internet, the city will not recoup the tax money because those people will not pay the city tax.

D) weaken. If the city is experiencing lowered retail sales, then the city will not recoup its revenue.

E) This answer does not weaken, in fact, we don't know what effect the increased prices will have - we don't know who will actuall have to pay the tax and who can avoid it so we don't know how this will affect the tax revenue.

waltiebikkiebal · Answer

I am not from the United States, nor from Europe, how can I possibly know that you pay all your taxes regionally?

If you DO pay all your taxes regionally, it actually strengthens the mayor his proposal, because revenues will go up.

Or am I something missing here?

Madhavi1990 · Answer

Catch in the wording : "All true EXCEPT" - we need to find the one that actually plays to the mayor's prediction; only E does that. A would weaken, B,C not definite, D - obvious weakener. E is the only one that remains

arvind910619 · Answer

Imo E
This is a strengthen the conclusion question .
Only E is the valid contender.
C is a trap as even if the stores are best in the area why will customer pay higher cost for the items which they can buy through internet at a lesser price.

chesstitans · Answer

only A,C, and E are left.
A is out b/c of "substantially lower"
C is incorrect too/
E is the answer even though it is quite tricky here b/c of "slight markup"

gmatexam439 · Answer

Over the past few years, retailers in the town of Statesville have suffered from decreasing sales, largely because increasing numbers of consumers, after seeing items in stock at those retailers' stores, have opted instead to purchase those items on the Internet. As a result, Statesville's local government revenues have been impacted as well. To make up the lost revenue, Statesville's mayor has proposed legislation that would require Internet retailers to charge and remit local sales taxes on all orders shipped to addresses in Statesville, at the same tax rate assessed on purchases in physical stores. If this legislation is enacted, the mayor reasons, Statesville will be able to bring its revenue back up to the level of a few years ago.

All of the following, if true, cast doubt on the mayor's conclusion EXCEPT

All of the following, if true, cast doubt on the mayor's conclusion EXCEPT

(A) Because they do not need to rent or maintain physical showrooms, Internet retailers generally charge substantially lower prices for most items than do physical stores. - If the money being charged is less than in retail stores, then the taxes will also be less. Weakens. 
 
(B) The vast majority of Statesville's residents have at least one trusted friend or family member who lives in one of the smaller towns surrounding Statesville and whom they would trust to receive their packages. - People will simply order outside the town. Weakens. 
 
(C) Statesville's retail stores have been consistently considered the best in the county, and consequently draw a lot of shoppers from other towns. - As per the premise, people check out stuff in retail stores and shop online. Thus other town people are no exception. Since the online shopping will happen in other town, the taxes in the current state won't have any impact. Weakens. 
 
(D) Over the next few years, the Statesville area is likely to experience a severe recession, which could reduce consumer spending by as much as 40 percent. - If the spending power reduces, then the people will buy less thus tax revenue generation will reduce. Weakens. 
 
(E) Administering the proposed tax will increase the cost of doing business for Internet retailers, who will then pass the increased cost on to consumers in the form of slight markups on the price of merchandise. - Correct. The increased cost will cause the generation of more tax revenue. Strengthens.

gullyboy09 · Answer

Hi  MartyMurray , can you please help me with option E here?

"Administering the proposed tax will increase the cost of doing business for Internet retailers, who will then pass the increased cost on to consumers in the form of slight markups on the price of merchandise." - but then it can also mean that consumers will stop buying, or will buy less from Internet retailers, and in that case revenue might not reach to previous levels. My thinking was even if consumers stop buying, or less the shopping from the internet, they will buy from the physical stores if their price is now relatively low, then in any case previous levels will be achieved, is it a correct understanding?

guddo · Answer

Over the past few years, retailers in the town of Statesville have suffered from decreasing sales, largely because increasing numbers of consumers, after seeing items in stock at those retailers' stores, have opted instead to purchase those items on the Internet. As a result, Statesville's local government revenues have been impacted as well. To make up the lost revenue, Statesville's mayor has proposed legislation that would require Internet retailers to charge and remit local sales taxes on all orders shipped to addresses in Statesville, at the same tax rate assessed on purchases in physical stores. If this legislation is enacted, the mayor reasons, Statesville will be able to bring its revenue back up to the level of a few years ago.

All of the following, if true, cast doubt on the mayor's conclusion EXCEPT

All of the following, if true, cast doubt on the mayor's conclusion EXCEPT

The mayor concludes that taxing Internet purchases shipped to Statesville will restore the town’s revenue to its earlier level.  The key issue  is whether the proposed tax would really make up the lost revenue. A choice weakens if it shows the town still would not recover enough money.  We want the one choice that does not do that.

A. Because they do not need to rent or maintain physical showrooms, Internet retailers generally charge substantially lower prices for most items than do physical stores.

This casts doubt on the conclusion. If Internet prices are lower, then even with the same tax rate, the tax collected per purchase will usually be lower than it would have been on the higher-priced in-store purchase. So revenue may still stay below the old level.

B. The vast majority of Statesville's residents have at least one trusted friend or family member who lives in one of the smaller towns surrounding Statesville and whom they would trust to receive their packages.

This casts doubt on the conclusion. If residents can ship purchases outside Statesville, they may avoid the local tax, so the town would collect less revenue than the mayor expects.

C. Statesville's retail stores have been consistently considered the best in the county, and consequently draw a lot of shoppers from other towns.

This casts doubt on the conclusion. Some of the lost revenue may have come from shoppers outside Statesville who used to buy in town but now buy online. The proposed tax applies only to orders shipped to addresses in Statesville, so it would not recover revenue lost from those outside shoppers.

D. Over the next few years, the Statesville area is likely to experience a severe recession, which could reduce consumer spending by as much as 40 percent.

This casts doubt on the conclusion. If overall spending drops sharply, tax revenue may stay low even if the new tax is imposed.

E. Administering the proposed tax will increase the cost of doing business for Internet retailers, who will then pass the increased cost on to consumers in the form of slight markups on the price of merchandise.

This does not cast doubt on the conclusion. If prices rise slightly, then the taxable amount of each purchase also rises slightly, which would tend to increase, not reduce, the tax collected by Statesville.

Answer: (E)

Over the past few years, retailers in the town of

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Over the past few years, retailers in the town of

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