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# Which of the following, if true, is the most logical

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Senior Manager
Joined: 05 Oct 2006
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Which of the following, if true, is the most logical [#permalink]

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14 Jan 2007, 04:11
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Which of the following, if true, is the most logical completion of the argument below?
The tax system of the Republic of Grootland encourages borrowing by granting its taxpayers tax relief for interest paid on loans. The system also discourages saving by taxing any interest earned on savings. Nevertheless, it is clear that Grootlandâ€™s tax system does not consistently favor borrowing over saving, for if it did, there would be no______
(A) tax relief in Grootland for those portions of a taxpayerâ€™s income, if any, that are set aside to increase that taxpayerâ€™s total savings
(B) tax relief in Grootland for the processing fees that taxpayers pay to lending institutions when obtaining certain kinds of loans
(C) tax relief in Grootland for interest that taxpayers are charged on the unpaid balance in credit card accounts
(D) taxes due in Grootland on the cash value of gifts received by taxpayers from banks trying to encourage people to open savings accounts
(E) taxes due in Grootland on the amount that a taxpayer has invested in interest-bearing savings accounts

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Director
Joined: 28 Dec 2005
Posts: 915

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Re: cr - tax system [#permalink]

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14 Jan 2007, 07:06
It is A.
Govt encourages borrowing by tax relief on interest paid
Govt discourages saving by tax due on interest earned

So, inconsistency can be see when:

either govt makes a tax due during borrowing or
govt gives some tax relief for saving.

AK47 wrote:
Which of the following, if true, is the most logical completion of the argument below?
The tax system of the Republic of Grootland encourages borrowing by granting its taxpayers tax relief for interest paid on loans. The system also discourages saving by taxing any interest earned on savings. Nevertheless, it is clear that Grootlandâ€™s tax system does not consistently favor borrowing over saving, for if it did, there would be no______
(A) tax relief in Grootland for those portions of a taxpayerâ€™s income, if any, that are set aside to increase that taxpayerâ€™s total savings
shows inconsistency
(B) tax relief in Grootland for the processing fees that taxpayers pay to lending institutions when obtaining certain kinds of loans
shows consistency for borrowing tax relief
(C) tax relief in Grootland for interest that taxpayers are charged on the unpaid balance in credit card accounts
again consistency for borrowing
(D) taxes due in Grootland on the cash value of gifts received by taxpayers from banks trying to encourage people to open savings accounts
consistent with tax due with savings
(E) taxes due in Grootland on the amount that a taxpayer has invested in interest-bearing savings accounts

same as D

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Director
Affiliations: FRM Charter holder
Joined: 02 Dec 2006
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Schools: Stanford, Chicago Booth, Babson College

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14 Jan 2007, 08:43
One more A guys.

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Senior Manager
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14 Jan 2007, 10:14
A it is ,but somehow i got stuck between A and C .......Re-reading gave me A. In real GMAT there won't be time to re-read though

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Director
Joined: 24 Aug 2006
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Location: Dallas, Texas

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14 Jan 2007, 13:23
A !
Very good question.
_________________

"Education is what remains when one has forgotten everything he learned in school."

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Manager
Joined: 29 Nov 2006
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14 Jan 2007, 13:50
I like A. All the choice talk about irrelevant information

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14 Jan 2007, 13:50
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# Which of the following, if true, is the most logical

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