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# When Americans filed their tax returns this year, the United

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Manager
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When Americans filed their tax returns this year, the United [#permalink]

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08 Oct 2012, 07:50
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55% (hard)

Question Stats:

59% (02:29) correct 41% (01:18) wrong based on 824 sessions

When Americans filed their tax returns this year, the United States Treasury Department collected $315.1 billion in tax revenue, a 13.4% increase over last year. Yet the number of tax returns filed by employees did not increase significantly over the past year. Each of the following, if true, could explain the simultaneous increase in tax revenue collection and the unchanged number of employee tax returns filed EXCEPT: • During this year, the number of women who re-entered the workforce as employees, after taking time off to raise children, was greater than the number of people who retired from the workforce. • Many retired workers owed more in taxes this year due to an increase in dividends and capital gains on their stock investments. • Last year, tax revenues were unusually low because the stock market experienced a marked decline, and many taxpayers reduced their taxable income with capital losses. • Compared with previous years, a greater percentage of the total tax revenue this year was collected from small businesses and corporations. • The employees who filed tax returns were paid higher wages this year than they were in the past, and thus owed more to the government in taxes per person. OA Later [Reveal] Spoiler: OA If you have any questions you can ask an expert New! MBA Section Director Joined: 19 Mar 2012 Posts: 3650 Location: India GMAT 1: 760 Q50 V42 GPA: 3.8 WE: Marketing (Energy and Utilities) Followers: 1679 Kudos [?]: 13472 [1] , given: 1904 Re: When Americans filed their tax returns.. [#permalink] ### Show Tags 08 Oct 2012, 08:01 1 This post received KUDOS Expert's post 1 This post was BOOKMARKED aditi1903 wrote: When Americans filed their tax returns this year, the United States Treasury Department collected$315.1 billion in
tax revenue, a 13.4% increase over last year. Yet the number of tax returns filed by employees did not increase
significantly over the past year. Each of the following, if true, could explain the simultaneous increase in tax
revenue collection and the unchanged number of employee tax returns filed EXCEPT:
• During this year, the number of women who re-entered the workforce as employees, after taking time off to raise
children, was greater than the number of people who retired from the workforce.
• Many retired workers owed more in taxes this year due to an increase in dividends and capital gains on their stock
investments.
• Last year, tax revenues were unusually low because the stock market experienced a marked decline, and many
taxpayers reduced their taxable income with capital losses.
• Compared with previous years, a greater percentage of the total tax revenue this year was collected from small
• The employees who filed tax returns were paid higher wages this year than they were in the past, and thus owed
more to the government in taxes per person.

OA Later

Good One!
Let me try!

E. Employees remain the same but they pay more taxes because they get higher wages: Resolves the paradox.
D. Same number of employees pay more taxes in small businesses (probably because of increased salary etc). Resolves the paradox.
C. Tax collected this year is higher than last years taxes because during the last year people had low incomes. Resolves the paradox
B. The same number of retired employees pay more taxes. Resolves the paradox.
A. Tax returns are more but we dont know how much the women's taxes compare with the people who retired. DOES NOT RESOLVE ANYTHING!

Can you tell me where did you get this question from?
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Re: When Americans filed their tax returns.. [#permalink]

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08 Oct 2012, 08:08
1
KUDOS
Expert's post
2
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So taken from Manhattan CAT i assume!
I post small sets from there (with strategies) in this thread, so you can check that out if you want
gmatclub-verbal-attack-139074.html
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Re: When Americans filed their tax returns.. [#permalink]

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11 Oct 2012, 03:46
1
KUDOS
+1A

• During this year, the number of women who re-entered the workforce as employees, after taking time off to raise children, was greater than the number of people who retired from the workforce. (This is our answer as it does not resolve the paradox. This imply that the number of tax payers increased and tax too. What we need to find is a situation wherein tax has increased but the number of employee has not)
• Many retired workers owed more in taxes this year due to an increase in dividends and capital gains on their stock investments. (Resolves the paradox, if they owe more, they will pay more)
• Last year, tax revenues were unusually low because the stock market experienced a marked decline, and many taxpayers reduced their taxable income with capital losses. (Resolves the paradox, On comparative terms, this year’s tax will be higher)
• Compared with previous years, a greater percentage of the total tax revenue this year was collected from small businesses and corporations. (resolves)
• The employees who filed tax returns were paid higher wages this year than they were in the past, and thus owed more to the government in taxes per person. (resolves)

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Re: When Americans filed their tax returns this year, the United [#permalink]

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08 Nov 2012, 03:28
2
KUDOS
A very good question.
I missed the Except part and ended up wasting 3 minutes for nothing.
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Re: When Americans filed their tax returns this year, the United [#permalink]

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07 Dec 2012, 16:42
1
KUDOS
Case: Americans filled their tax returns. Tax revenue increased by 13,4 % . However the number of tax returns filled by employees did not increase.

When Americans filed their tax returns this year, the United States Treasury Department collected $315.1 billion in tax revenue, a 13.4% increase over last year. Yet the number of tax returns filed by employees did not increase significantly over the past year. Each of the following, if true, could explain the simultaneous increase in tax revenue collection and the unchanged number of employee tax returns filed EXCEPT: • During this year, the number of women who re-entered the workforce as employees, after taking time off to raise children, was greater than the number of people who retired from the workforce. - If it is true than this should have increased the tax revenue because more employee entered (therefore more tax revenue) into workforce than retirees(who will not pay employee tax) • Many retired workers owed more in taxes this year due to an increase in dividends and capital gains on their stock investments. The statement says that the taxes have in general increased that increase might have arised from the other revenues such as dividend, rent, other income...etc • Last year, tax revenues were unusually low because the stock market experienced a marked decline, and many taxpayers reduced their taxable income with capital losses. If the stock market declined last year we understand that last year the revenue from the taxation of stock's value increase was less when compared with that of this year • Compared with previous years, a greater percentage of the total tax revenue this year was collected from small businesses and corporations.. The statement says that the taxes have in general increased that increase might have arised from the other revenues such as corporate tax • The employees who filed tax returns were paid higher wages this year than they were in the past, and thus owed more to the government in taxes per person. The employees earn more therefore we should expect that the employee tax should have been increased , yet it mentions that they have owed therefore balancing the tax revenue from salary or bonus OA Later _________________ Please give kudos if you enjoy the explanations that I have given. Thanks Current Student Joined: 06 Sep 2013 Posts: 2005 Concentration: Finance Followers: 68 Kudos [?]: 643 [0], given: 355 Re: When Americans filed their tax returns this year, the United [#permalink] ### Show Tags 09 May 2014, 07:56 1 This post was BOOKMARKED aditi1903 wrote: When Americans filed their tax returns this year, the United States Treasury Department collected$315.1 billion in
tax revenue, a 13.4% increase over last year. Yet the number of tax returns filed by employees did not increase
significantly over the past year. Each of the following, if true, could explain the simultaneous increase in tax
revenue collection and the unchanged number of employee tax returns filed EXCEPT:
• During this year, the number of women who re-entered the workforce as employees, after taking time off to raise
children, was greater than the number of people who retired from the workforce.
• Many retired workers owed more in taxes this year due to an increase in dividends and capital gains on their stock
investments.
• Last year, tax revenues were unusually low because the stock market experienced a marked decline, and many
taxpayers reduced their taxable income with capital losses.
• Compared with previous years, a greater percentage of the total tax revenue this year was collected from small
• The employees who filed tax returns were paid higher wages this year than they were in the past, and thus owed
more to the government in taxes per person.

OA Later

Its a two team contest between A and D. Personally, I went with A because there were just too many assumptions to make in D? Are the tax rates of small business and corporations greater or smaller than the average tax rate? Who knows, one can make the assumptions that based on real world in most developed countries corporate tax is greater than income tax in average but we can't really imply anything that is not stated somehow in the stimulus

Quite debatable, will stick around to hear more comments

Cheers!
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Re: When Americans filed their tax returns this year, the United [#permalink]

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16 May 2014, 08:43
OE for this one or expert's opinion would be of great help for this one

Cheers!
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Re: When Americans filed their tax returns this year, the United [#permalink]

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18 May 2014, 11:04
There is an increase in tax revenue but the number of people who filed returns did not increase.

ALL the answers except A, resolves this conflict with explains.

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Re: When Americans filed their tax returns this year, the United [#permalink]

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19 May 2014, 12:07
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1
This post was
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was stuck between A and D and ended up choosing D

D: the greater revenue might have been from increase in tax amount. so employees can remain same
(wonder how i ended up with this)
A: There is an increase in the no. of employees (this does not resolve the paradox)
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Re: When Americans filed their tax returns this year, the United [#permalink]

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26 May 2014, 00:54
I wonder how D can be a plausible answer
It states- a greater % of tax was collected from business..

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Re: When Americans filed their tax returns this year, the United [#permalink]

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26 May 2014, 01:09
1
KUDOS
Quote:
I wonder how D can be a plausible answer
It states- a greater % of tax was collected from business..

well the reasoning is simple : D does open up that window that could explain the simultaneous increase in tax revenue collection and the unchanged number of employee tax returns filed

D says :Compared with previous years, a greater percentage of the total tax revenue this year was collected from small businesses and corporations.---->there by creating a case where the total tax collected has increased while keeping the number of taxpayers unchanged . u could argue that the reverse can also happen in such case .however u have to remember that GMAC CR are not open debate session where we can keep rebutting with "if's" and "but"
remember that in such question the given options may not directly explain everything

i am sure u will agree as why A is the answer .because it is evidently stating that number of taxpayers have increased in number
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When Americans filed their tax returns this year, the United [#permalink]

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19 Jun 2015, 05:18
souvik101990

Can you tell me hows C wrong.
It hasn't been mentioned anywhere that this year the stock market has rised or anything.Then how can we conclude that the revenue from stock market will be greater than of last year.??

Hello.

We don't have to conclude anything in these type of questions. One good reason is enough. C says that last year people made unexpected losses and hence filed less returns. (Which would not be the case this year.)

Hope that helps.
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Re: When Americans filed their tax returns this year, the United [#permalink]

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07 Feb 2017, 01:45
Tax revenues increased 13.4% from the previous year, even though the number of employee tax returns filed stayed almost constant. Many possible explanations exist: an increase in tax revenue collected per person, an increase in tax revenue collected from other sources, such as from businesses or taxes on investments, a misleading increase due to a return to normal levels after a sharp reduction last year, and so on.
(A) CORRECT. This statement does not explain the seemingly contradictory trends. It does not address the change in the revenue at all.
(B) An increase in taxes paid by non-employees on dividends and capital gains would explain how the total tax revenue increased even though the number of employee tax returns filed stayed the same.
(C) If tax revenues were unusually low last year, and then returned to normal levels this year, that would explain how tax revenues could have increased during that time period even though the number of employee tax returns was unchanged.
(D) Rising corporate tax collections could explain rising tax revenue at a time when the number of employee tax returns stayed the same.
(E) Even though the number of employees paying taxes is the same, the fact that the government is collecting more money from them would explain the increase in revenue.
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Re: When Americans filed their tax returns this year, the United [#permalink]

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16 Mar 2017, 05:38
Confused between A and D
Compared with previous years, a greater percentage of the total tax revenue this year was collected from small businesses and corporations.

eg: in 1999 Total rev = 100 and rev collected from small business = 30
2000 Total rev = 110 and rev collected from small business = 55
How does this resolve the paradox ?
Re: When Americans filed their tax returns this year, the United   [#permalink] 16 Mar 2017, 05:38
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