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# With Proposition 13, if you bought your house 11 years ago

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Intern
Joined: 22 Apr 2008
Posts: 35
With Proposition 13, if you bought your house 11 years ago [#permalink]

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24 Jul 2008, 13:29
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With Proposition 13, if you bought your house 11 years ago for \$75,000, your property tax would be approximately \$914 a year (1 percent of \$75,000 increased by 2 percent each year for 11 years); and if your neighbor bought an identical house next door to you for \$200,000 this year, his tax would be \$2,000 (1 percent of \$200,000). Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000). Which of the following is the conclusion for which the author most likely is arguing in the passage above?

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value.
(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes.
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.
(E) Proposition 13 has benefited some homeowners more than others.

I selected the answer D but that is wrong

Reason - With Proposition 13 -
Old property wil be taxed 1% in 1st year and 2nd year 3%, 3rd year 5% and so on so in 11th year the tax will be 21% of 75000

whereas new property will be charged 1% of 200,000 in 1st year and 3% in 2nd year and so on

Now because both the properties are neighboring properties... hence thy will continue to charge differently if Proposition 13 is there

What is wrong with above reasoning?

Please explain your option and guidance on how to tackle such questions will be great

Thnks

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SVP
Joined: 30 Apr 2008
Posts: 1841
Location: Oklahoma City
Schools: Hard Knocks

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24 Jul 2008, 13:36
B.

sjgmat wrote:
With Proposition 13, if you bought your house 11 years ago for \$75,000, your property tax would be approximately \$914 a year (1 percent of \$75,000 increased by 2 percent each year for 11 years); and if your neighbor bought an identical house next door to you for \$200,000 this year, his tax would be \$2,000 (1 percent of \$200,000). Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000). Which of the following is the conclusion for which the author most likely is arguing in the passage above?

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value.
Way beyond the scope of the argument. It would be a leap for the author to continue and conclude this next.
(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.
Uses "likely" so the conclusion is not overstated. Each owner would have an increase. One from \$914 to \$6k and the other \$2k to \$6k. At a minimum, this is a 200% increase...that's substantial.

(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes.
The argument says nothing about inflation of property values. Out of scope.
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.
The argument doesn't seem to care about that. It seems to discuss the differences between having Prop 13 and not having prop 13. It makes note the difference in tax amounts, but doesn't make a judgment in this area.
(E) Proposition 13 has benefited some homeowners more than others.
While this may be true, it is not supported by the stem and would not be a good or likely conclusion. Each homeowner would pay 1% initially and then that would be increased annually by 2%. Same formula for each owner, the only difference is when the house is purcahsed. You get the benefit of being in your home longer and not having to pay taxes on the inflation value. This could be a conclusion, but it would only be stating the obvious and is not a likely conclusion when it's already a secondary concept.

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Intern
Joined: 22 Apr 2008
Posts: 35

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25 Jul 2008, 01:32

By any chance do you have 1000 CR with OE. The copy that I have has only OA, so sometimes it becomes difficult to understand why my option is incorrect

Thanks again
sj
Director
Joined: 12 Jul 2008
Posts: 512
Schools: Wharton

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25 Jul 2008, 14:11
sjgmat wrote:

By any chance do you have 1000 CR with OE. The copy that I have has only OA, so sometimes it becomes difficult to understand why my option is incorrect

Thanks again
sj

Almost all the 1000 CR have been posted on the forum. Just do a search and you'll likely find a good explanation.

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If you would like to discuss this question please re-post it in the respective forum. Thank you!

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Re: CR: 1000 Question   [#permalink] 25 Jul 2008, 14:11
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# With Proposition 13, if you bought your house 11 years ago

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