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# Which of the following best completes the passage below? One

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Manager
Joined: 23 Apr 2007
Posts: 132
Which of the following best completes the passage below? One [#permalink]

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24 Jun 2007, 08:24
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2. Which of the following best completes the passage below?
One tax-reform proposal that has gained increasing support in recent years is the flat tax, which would impose a uniform tax rate on incomes at every level. Opponents of the flat tax say that a progressive tax system, which levies a higher rate of taxes on higher-income taxpayers, is fairer, placing the greater burden on those better able to bear it. However, the present crazy quilt of tax deductions, exemptions, credits, and loopholes benefits primarily the high-income taxpayer, who is consequently able to reduce his or her effective tax rate, often to a level below that paid by the lower-income taxpayer. Therefore, ______
(A) higher-income taxpayers are likely to lend their support to the flat-tax proposal now being considered by Congress
(B) a flat-tax system that allowed no deductions or exemptions would substantially increase actual government revenues
(C) the lower-income taxpayer might well be penalized by the institution of a flat-tax system in this country
(D) the progressive nature of our present tax system is more illusory than real
(E) the flat tax would actually be fairer to the lower-income taxpayer than any progressive tax system could be

Could someone please explain why the ans is 'D'?
Manager
Joined: 23 Dec 2006
Posts: 134

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24 Jun 2007, 08:49
AugiTh wrote:
2. Which of the following best completes the passage below?
One tax-reform proposal that has gained increasing support in recent years is the flat tax, which would impose a uniform tax rate on incomes at every level. Opponents of the flat tax say that a progressive tax system, which levies a higher rate of taxes on higher-income taxpayers, is fairer, placing the greater burden on those better able to bear it. However, the present crazy quilt of tax deductions, exemptions, credits, and loopholes benefits primarily the high-income taxpayer, who is consequently able to reduce his or her effective tax rate, often to a level below that paid by the lower-income taxpayer. Therefore, ______
(A) higher-income taxpayers are likely to lend their support to the flat-tax proposal now being considered by Congress out of scope
(B) a flat-tax system that allowed no deductions or exemptions would substantially increase actual government revenues out of scope
(C) the lower-income taxpayer might well be penalized by the institution of a flat-tax system in this country no evidence to support this
(D) the progressive nature of our present tax system is more illusory than real POE, within scope, etc etc
(E) the flat tax would actually be fairer to the lower-income taxpayer than any progressive tax system could be i want to say that this is wrong because it's too extreme in it's conclusion. not all high income people skirt tax laws, and so progressive taxes are not categorically less fair than a flat tax.

Could someone please explain why the ans is 'D'?
Director
Joined: 29 Jul 2006
Posts: 856

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24 Jun 2007, 18:31
I think B is not out of scope...the reason why its wrong it that loopholes and credits(the other things in the list) may still exist...so we cant say that govt revenues will increase.
Manager
Joined: 23 Dec 2006
Posts: 134

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24 Jun 2007, 19:01
Sure it's out of scope. The passage is about the incidence of a tax and the fairness of said incidence; government revenue is never mentioned.
Director
Joined: 29 Jul 2006
Posts: 856

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25 Jun 2007, 11:28
sludge wrote:
Sure it's out of scope. The passage is about the incidence of a tax and the fairness of said incidence; government revenue is never mentioned.

Thanks for correcting me...B is indeed out of scope.
25 Jun 2007, 11:28
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