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# With Proposition 13, if you bought your house 11 years ago for \$75,000

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With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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21 Jan 2008, 14:59
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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(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.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(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.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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With Proposition 13, if you bought your house 11 years ago  [#permalink]

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17 Jan 2010, 02:53
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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"If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates."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 Hence even the time the house was bought is a factor involved and hence we cannot assume the if Proposition 13 is not repealed, it would tax identical properties at different rates!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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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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12 Feb 2008, 05:09
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I also picked D. But it is B.
+1 for Q

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?
"conclusion" is a "must be true" statement.

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value. - "unconstitutional" is an additional information.
(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes. - there are no visible contradictions. the best by POE.
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes. - "preventing inflation" is an additional information.
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. - properties is generalization of houses (Please, correct me if I'm wrong). We cannot infer it from the passage. Is commercial property also taxed in different rates?
(E) Proposition 13 has benefited some homeowners more than others. - I'm not sure but it seems to be incomplete and "has benefited" is not clear here for me.
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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12 Feb 2008, 11:57
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walker wrote:
I also picked D. But it is B.
+1 for Q

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?
"conclusion" is a "must be true" statement.

(A) Proposition 13 is unconstitutional because it imposes an unequal tax on properties of equal value. - "unconstitutional" is an additional information.
(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes. - there are no visible contradictions. the best by POE.
(C) By preventing inflation from driving up property values, Proposition 13 has saved homeowners thousands of dollars in property taxes. - "preventing inflation" is an additional information.
(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates. - properties is generalization of houses (Please, correct me if I'm wrong). We cannot infer it from the passage. Is commercial property also taxed in different rates?
(E) Proposition 13 has benefited some homeowners more than others. - I'm not sure but it seems to be incomplete and "has benefited" is not clear here for me.

Walker, definitely a tough one (+1 for question). I'm not quite sure if the OA is correct on this.

E is actually making more sense now. Refer the last sentence - "Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000)." ==> However, with Proposition 13, someone who bought their home earlier pays lesser taxes (\$914) than someone who bought an identical house this year (\$2000). It is clearly benefitting early buyers more than others.

B could be wrong because it comes across as being over-generalized ("every houseowner", "substantial increases" etc.). We don't have sufficient information to quantify these claims (especially the "every houseowner" part)
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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15 Feb 2008, 11:18
gixxer1000 wrote:
If you bought a home 11 years ago you would be paying 22% for property tax.
............
Here would be the options for the home owner who bought the house 11 years ago:
With: \$75,000 x 22% = \$16,500
.........

Sorry, I don't understand your logic:
"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)"

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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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15 Feb 2008, 13:17
1
This question was in my mind for whole day

Some fresh remarks:

1. The question is LSAT question rather than GMAT one. in GMAT "conclusion" questions are "must be true" questions. I'm not a guru in LSAT but I read some links and found that LSAR Logical Reasoning "conclusion" questions are not necessarily "must be true" one. (Please, correct me if I'm wrong). But I did not find good logic for such LSAT questions (due to lack of time and LSAT skills).

A,C are out - "unconstitutional" and "preventing inflation" are far away from the argument.

(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.
Here we have extreme generalization (every) with very tricky word "likely" that defends the generalization.

(D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.
I see two problems:
1. "identical properties" vs. "identical properties with different year of buying". There were some "identical properties" with the same year of buying that were and will be taxed at the same rates.

2. "continue". We have to assume that the Proposition 13 is a proposition to existing low rather than new one.

(E) Proposition 13 has benefited some homeowners more than others.
Here we also generalization (homeowners) with word "some" that defends the generalization. I cannot find something wrong with E. Only "benefited" bothers me.

So I between B and E. E is slightly better

Any ideas?
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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15 Feb 2008, 13:50
Walker between B and E ...I would still go with B

Read question stem again....what is author likely arguing for?

The tone of the arguments is not about "some people getting benefited more than others"

It is more about increase in tax due to repealing of proposition 13.
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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15 Feb 2008, 15:48
kyatin wrote:
...I would still go with B

Read question stem again....what is author likely arguing for?

The tone of the arguments is not about "some people getting benefited more than others"

It is more about increase in tax due to repealing of proposition 13.

I've tried to go back: from conclusion to the argument.

(B) If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes.
I don't understand why the author has to introduce "an identical house". it does not help to arrive at the conclusion.

It would be very great to find OE
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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15 Feb 2008, 16:12
1
Wasi, N. and White, M.J. (2005). Property tax limitations and mobility: The lock-in effect of California’s Proposition 13, NBER Working Paper No. W11108.

or

INTERNATIONAL REAL ESTATE REVIEW
2007 Vol. 10 No. 1: pp. 26 - 47
Residential Stability or Rational Bubble: Proposition 13 in Southern California
Mark Hoven Stohs

For example, a buyer A purchases a house for \$100,000 in 1975. Suppose
further that the property tax rate is 1%, property value increases at the rate of
10% per year and the inflation rate is 2%.4 In 2005 buyer A’s taxes would
have risen to \$1,811. In 2005 buyer B would pay \$1,744,940 for an
identical house and receive a property tax bill of \$17,449. Therefore, buyer
A’s annual property subsidy is \$15,638 (= \$17,449 – \$1,811). ..........

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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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16 Feb 2008, 11:43
kyatin wrote:
So whats the conclusion here

walker located Proposition 13 on the net, and having read the relevant excerpt, it looks like (E) is the correct answer since it explicitly mentions A's subsidy in the last statement (hence A benefited more than B). The OA is incorrect.

One can argue that this question is incomplete as the author does not make any argument in the given statements. Which is why they should refrain from having such answer choices in the actual exam.
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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16 Feb 2008, 12:03
incognito1 wrote:
One can argue that this question is incomplete as the author does not make any argument in the given statements. Which is why they should refrain from having such answer choices in the actual exam.

I agree. I read some posts of guys that passed GMAT and guys often said: "CR was pretty straightforward". Of all OG CR I fount only one CR that was not airtight (for me, of course ).
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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07 Sep 2010, 09:22
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amitjash wrote:
OA is potential candidate but can someone explain why other choices fail???

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 is not a good answer here - where is the OA from?

The passage draws two comparisons: it compares the tax on two identical houses under Prop 13, and it compares the tax on these homes with Prop 13 and without Prop 13. If these comparisons are leading to some kind of conclusion, that conclusion needs to relate to both comparisons; otherwise half the passage is simply irrelevant.

A is out of scope, since it mentions constitutionality, and there is no clue that the argument is about what might be constitutional.

B is not the likely conclusion here; B says that every homeowner will see an increase in taxes. The passage only compares two identical houses, nothing more - the passage certainly doesn't provide enough evidence to support the conclusion that every homeowner's tax will increase.

C is irrelevant, since the passage doesn't support any conclusion about inflation.

D is perfect. It takes into account both comparisons - the comparison between identical houses, and the comparison between tax paid with and without Prop 13 - and is a perfectly logical conclusion to the passage.

E might be true, but it doesn't follow from the specific detail provided in the passage, so isn't a likely conclusion to the argument.
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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07 Sep 2010, 22:03
amitjash wrote:
OA is potential candidate but can someone explain why other choices fail???

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 have a very basic question here. The question asks for conclusion that the author is most likely arguing. But the given stimulus seems to be worded in a very neutral sense. There are no strong words which could indicate the author's tone or intention. Given this, how could be really choose between choices B, D and E.

I could not rule out the following options because of the below mentioned reasons. Kindly let me know your thoughts on the same.

B - Reason present in the stimulus -- [highlight]Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000)[/highlight]

D - Reason present in the stimulus -- [highlight]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)[/highlight]

E - Reason present in the stimulus -- [highlight]your property tax would be approximately \$914 a year[/highlight] and [highlight]his tax would be \$2,000[/highlight]
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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08 Sep 2010, 13:43
ezhilkumarank wrote:
I have a very basic question here. The question asks for conclusion that the author is most likely arguing. But the given stimulus seems to be worded in a very neutral sense. There are no strong words which could indicate the author's tone or intention. Given this, how could be really choose between choices B, D and E.

There is no indication of any opinion in the passage, so I don't understand the comments above about the 'tone'. A lot of people seem to favour answer B here, so I might elaborate a bit about why it is not the right answer (I don't know where the OA is from, but the answer is certainly not B).

One useful question to ask here is: if I was arguing that (as answer B says) 'If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes', what examples would I use to prove my case? Would I use the example of two identical houses? Of course not - people would, justifiably, object: 'what about very expensive houses? And what about very cheap houses?' By using two identical houses, I could not make any kind of compelling argument that every house will see its taxes increase if Prop 13 is repealed.

On the other hand, answer D is a perfectly logical conclusion to the argument, particularly since it takes into account the fact that the passage draws a comparison between identical houses.
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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08 Sep 2010, 14:09
IanStewart wrote:
ezhilkumarank wrote:
I have a very basic question here. The question asks for conclusion that the author is most likely arguing. But the given stimulus seems to be worded in a very neutral sense. There are no strong words which could indicate the author's tone or intention. Given this, how could be really choose between choices B, D and E.

There is no indication of any opinion in the passage, so I don't understand the comments above about the 'tone'. A lot of people seem to favour answer B here, so I might elaborate a bit about why it is not the right answer (I don't know where the OA is from, but the answer is certainly not B).

One useful question to ask here is: if I was arguing that (as answer B says) 'If Proposition 13 is repealed, every homeowner is likely to experience a substantial increase in property taxes', what examples would I use to prove my case? Would I use the example of two identical houses? Of course not - people would, justifiably, object: 'what about very expensive houses? And what about very cheap houses?' By using two identical houses, I could not make any kind of compelling argument that every house will see its taxes increase if Prop 13 is repealed.

On the other hand, answer D is a perfectly logical conclusion to the argument, particularly since it takes into account the fact that the passage draws a comparison between identical houses.

The fact that the statement goes on to say - "Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000)." clearly shows that the author is pointing to something more than just choice D. Choice D is only pointing to the first half of the statement.

Also, "every" was followed by "likely". Hence, neutralizing the impact of "every". It does not mean every homeowner will, but likely.

We all agree that the choices boil down to B & D. I personally think that B might not be the nail in the head, but definitely concludes more than D.
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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08 Sep 2010, 14:23
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The fact that the statement goes on to say - "Without Proposition 13, both you and your neighbor would pay \$6,000 a year in property taxes (3 percent of \$200,000)." clearly shows that the author is pointing to something more than just choice D. Choice D is only pointing to the first half of the statement.

But that's the whole point: the identical houses are taxed identically without Prop 13, and differently with Prop 13. Only D takes into account both that the stem compares identical houses, and that the stem compares taxation under Prop 13 and not under Prop 13.

Also, "every" was followed by "likely". Hence, neutralizing the impact of "every". It does not mean every homeowner will, but likely.

From one example of two identical houses, it's an absolutely enormous stretch to conclude anything about what is likely to occur for 'every' homeowner. Words like 'all' and 'every' are buzzwords in CR - they are very rarely found in correct answers, since they are overly general.
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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09 Sep 2010, 14:42
D cannot be the answer....Just a thought triggering point here is :" How can a 11 yr old house and a new house be identical"?!?
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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09 Sep 2010, 14:46
identical properties can be truely identical if they have the same Economical Worth...
if 2 brand new houses are bought worth 200,000\$ each. If preposition 13 is nullified, both the owners would be paying the same 6,000\$...nothing different...so D is totally wrong!
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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09 Sep 2010, 21:12
ahsanmalik12 wrote:
D cannot be the answer....Just a thought triggering point here is :" How can a 11 yr old house and a new house be identical"?!?

It doesn't say that one of the houses is 'new'.

ahsanmalik12 wrote:
identical properties can be truely identical if they have the same Economical Worth...
if 2 brand new houses are bought worth 200,000\$ each. If preposition 13 is nullified, both the owners would be paying the same 6,000\$...nothing different...so D is totally wrong!

That's the point, precisely: the taxation is the same if Prop 13 is repealed, and different if it is not repealed, if the houses were bought at different times. That's why D is the right answer.
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Re: With Proposition 13, if you bought your house 11 years ago for \$75,000  [#permalink]

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10 Sep 2010, 02:54
D) If Proposition 13 is not repealed, identical properties will continue to be taxed at different rates.

Identical properties will not be taxed different...They'll be taxed only if the economical status is not balanced. Please go through the passage. The two houses it refers to are not equivalent in value. One of them is 11 yrs old...
Re: With Proposition 13, if you bought your house 11 years ago for \$75,000   [#permalink] 10 Sep 2010, 02:54

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