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A proposed change to federal income tax laws would eliminate deductions from taxable income for donations a taxpayer has made to charitable and educational institutions. So in particular, if this change were adopted, wealthy individuals would no longer be permitted such deductions. Therefore, many charitable and educational institutions would be forced to reduce services.

Which of the following is an assumption on which the argument depends?

The argument says that if tax deductions for donations are eliminated, many charitable and educational institutions will have to reduce services. The missing link is that eliminating the deduction would actually reduce donations, especially from wealthy individuals who provide important support.

A. Without the incentives offered by federal income tax laws, at least some wealthy individuals would not donate as much money to charitable and educational institutions as they otherwise would have.

This is correct. If wealthy individuals would donate just as much without the deduction, then the argument loses its reason for thinking institutions would have to reduce services. So the argument depends on the idea that donations would fall.

B. Most charitable and educational institutions are satisfied with the level of services that the contributions they currently receive allow them to provide.

This is not required. Whether institutions are satisfied with current service levels does not affect whether reduced donations would force service cuts.

C. The primary reason for not adopting the proposed change in the federal income tax laws cited above is to protect wealthy individuals from having to pay higher taxes.

This is not required. The argument is about the effect on institutions, not about protecting wealthy taxpayers.

D. Charitable and educational institutions do not currently receive a substantial proportion of their funds from tax monies collected by the government.

This is not required. Even if they receive substantial government funding, a loss of private donations could still force many institutions to reduce services.

E. Income tax laws should be changed to make donations to charitable and educational institutions the only permissible deductions from taxable income.

This is irrelevant. The argument does not depend on any broader proposal about what deductions should be allowed.

Answer: (A)
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Line of Reasoning 1: Cause-Effect Argument (Primary)
Elimination of Tax Deductions -> Wealthy Donors Reduce Contributions -> Institutions Force Service Cuts

Line of Reasoning 2: Comparison Argument (Secondary)
Charitable Contributions With Tax Incentives > Charitable Contributions Without Tax Incentives

ASSUMPTIONS:

Assumption 1: Wealthy individuals donate largely due to tax incentives rather than non-tax motivations.

Assumption 2: The drop in donations from wealthy individuals will lead to a significant total loss in institutional revenue.

Assumption 3: Institutions will be unable to find replacement funding sources to cover the lost donations.

Assumption 4: Institutions cannot handle the loss in funding by trimming operational waste, requiring direct cuts to services.

Assumption 5: Non-wealthy taxpayers will not increase their overall contributions to make up for the shortfall.
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