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

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15 Jan 2010, 21:34

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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 (B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.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 (D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.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.
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you are right. answer is B. will you explain? what's wrong with D

D says: "If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates."

In the given stem, we have no proof of this statement. We have the word identical property being bought at a different rate but there is another factor next to it. One preoperty was bought 11 years and another identical property was bought this year. Hence even the time the house was bought is a factor involved and hence we cannot assume the if Proposition 13 is not repealed, it would tax identical properties at different rates!

And if you are considering the last statement as the bases for this answer, this won't be correct. As per last statement - "Without Proposition 13, both you and your neighbor would pay $6,000 a year in property taxes" it means If No Proposition 13 ....... then Same Tax But this doesn't mean that below statement is TRUE: If Proposition 13.... then DIFF TAX.... - This cannot be true! Imagine if you and your neighbour have the same property. Even with Proposition 13 rule, you would pay same Tax.

Hence D is wrong...

B says - "If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes." This is but obvious as the same is given in the stem. With Proposition, the tax would be $2,000. And if no Proposition then the tax would be $6,000... This would hold good for any property since with Proposition 13 it would be 1% of Property value of the first yr and without Proposition 13 it would be 3% of the property value
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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. Author believes the opposite, in my view.

(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.

If the property depreciated substantially after the purchase, say from $75000 to $100, then the new homeowner will enjoy the benefit of the repeal and this statement would be false. But, we need to consider the intent of the author, who is using a real time scenario, in which the property price has actually appreciated a great deal and is likely to grow further. In this situation, paying 3% of the variable property price would definitely be more expensive than that from the scheme of proposition 13. Thus, I can safely assume that the author most likely wants to make this conclusion.

(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes.

What a check!! 75000 to 200000.

(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.

This will be true only if the property is purchased at two different point in time. If two people buy identical properties at the same time, they will pay the same taxes. If the statement said "may" instead of "will", it would be more plausible.

(E) Proposition 13 has benefited some homeowners more than others.

In terms of the exact figure, may be. A house worth $100M would have saved more money, right. But, in terms of percentage, not likely. The case author presented seems to benefit everybody equally w.r.t the valuation of the property and the tax the owner is liable to pay.

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.

B For me as 6000 > 914 & 6000 > 2000 as well simply B states this only.......
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B is the ans . Option D . (D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. Here it talks about identical properties. We have no information about the identical properties. So no conclusion / inference could be drawn.

With Proposition 13. a 75,000 flat (11 years ago) --> $914 tax a 200,000 flat (now) --> $2000

Without Proposition 13, a 75,000 flat (11 years ago) --> $2000 tax a 200,000 flat (now) --> $2000 tax

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value. (Out of scope) (B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes. (Answer) (C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes. (Out of scope) (D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. (Out of scope) (E) Proposition 13 has benefited some homeowners more than others. (There is no basis for comparison of benefit)

I got it down as B. It seems the only conclusion we can make right?

Re: With Proposition 13, if you bought your house 11 years ago [#permalink]

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27 Jun 2014, 20:25

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Experts, Could you please explain why's B correct? B: If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.

With Proposition 13. a 75,000 flat (11 years ago) --> $914 tax a 200,000 flat (now) --> $2000

Option B is too specific to be correct for the argument. Option B says "every" homeowner whereas the argument says specifically about houses worth 75k & 2L. Even if the argument isn't talking specifically about these numbers, there'd still be a chance of house-owners with different ratio/kind of combinations e.g. 75k & 75k or 75k & 80k etc. on which the preposition 13 wouldn't apply atall. e.g. "every house-owner" would include a farm-house owner who doesn't have a neighbour, maybe.

So, going by the above logic, I rejected option B and chose option E since argument mentions: 1. 1 percent of $75,000 increased by 2 percent each year for 11 years 2. 1 percent of $200,000 In the second case, the increment of 2% isn't specifically mentioned, so, second case benefits more. Even though option E requires a bit of assumptions too but it is far better than option B because "every" house-owner would fall prey to many specific cases.

Re: With Proposition 13, if you bought your house 11 years ago [#permalink]

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07 Aug 2014, 10:19

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.

According to me, it certainly came down between options B and D. And B certainly wins. I shall discuss each and every option:-

A] Out of scope - Nothing mentioned whether Proposition 13 is unconstitutional or not.

B] Correct answer choice - if in case proposition 13 is ruled out then every homeowner will pay 3% of the amount every year, irrespective of the tenure or time period. Let us take certain examples:-

(i) Under proposition 13 the person who was paying @ 1% with the increase in 2% every year has to pay more for the same property value. (II) Under proposition 13 the person who has just bought a property this year, was supposed to pay @ 1% but now is supposed to pay more i.e 3%. (iii) The person who was not under proposition 13, will be paying @ 3% but the 3% shall be calculated on the whole amount of the increased property value. So last year if the property value for eg: was $100,000 and this year the property value is $300,00 then the flat charging of 3% will certainly increase the property taxes substantially right;

C] It says Proposition 13 saved homeowners loads of dollars via or through or by preventing inflation - the stimulus mentions that the property taxes are increased by 2% every year, so it might be that inflation may be considered. Nothing explicitly mentioned.

D] Actually this inference cannot be made at all - as Proposition 13 is charging the same rate to every property on the basis of the time the property is bought. So time is the only difference. The rate of 1% is fixed for all properties under proposition 13 its just the amount differ based on the value and time. So technically different rates are not charged to properties.

E] Wishy-Washy answer choice. As some means what figure and others mean what figure. we cannot infer anything based on this answer choice.

Hope this helps!

Any expert can certainly discuss or share their perspective.

Thanks!
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Re: With Proposition 13, if you bought your house 11 years ago [#permalink]

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13 Sep 2014, 17:07

Amit, how do we know EVERY homeowner will pay 3% if it only mentions 75k and 200k houses. Maybe Preposition 13 only applies to those ranges, we have no idea since there's no mention of the extent of this law.

"divine" made the same argument yet nobody answered him.

Re: With Proposition 13, if you bought your house 11 years ago [#permalink]

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01 May 2016, 23:32

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Re: With Proposition 13, if you bought your house 11 years ago [#permalink]

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21 Jun 2016, 00:41

IMO B.

As Option B, can be inferred from the argument without adding any assumption/extrapolation.

The argument says - Without the proposition 13, the tax will be 3% for both you and neighbour.

The above sentence in argument implies that the taxes will increase for both the parties. This is exactly what B Says .

Now, lets look at a trap Option D, it says if the proposition is revoked identical properties will continue to pay different taxes. Wait a minute! Which identical properties?? The ones bought at different times or at the same time?? Option D leaves it to us to assume the answer for these questions. Hence, this cannot be inferred from the argument.

gmatclubot

Re: With Proposition 13, if you bought your house 11 years ago
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21 Jun 2016, 00:41

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