Aroca County's public schools are supported primarily by taxes on property. The county plans to eliminate the property tax and...
GMAT Critical Reasoning : (CR) Questions
Aroca County's public schools are supported primarily by taxes on property. The county plans to eliminate the property tax and support schools with a new \(3\%\) sales tax on all retail items sold in the county. \(3\%\) of current retail sales is less than the amount collected through property taxes, but implementation of the plan would not necessarily reduce the amount of money going to Aroca County public schools, because ______.
Which if the following, if true, most logically completes the argument?
Passage Analysis:
| Text from Passage | Analysis |
| Aroca County's public schools are supported primarily by taxes on property. |
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| The county plans to eliminate the property tax and support schools with a new three percent sales tax on all retail items sold in the county. |
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| Three percent of current retail sales is less than the amount collected through property taxes |
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| but implementation of the plan would not necessarily reduce the amount of money going to Aroca County public schools, because _______ |
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Argument Flow:
We start with the current system (property tax funds schools), then learn about a proposed change (switch to sales tax). Next, we see an apparent problem (sales tax brings in less money), but then we're told this problem might not be real. The argument sets up a puzzle and asks us to figure out why schools wouldn't lose money despite the lower tax revenue.
Main Conclusion:
The plan to switch from property tax to sales tax would not necessarily reduce school funding, even though the sales tax currently brings in less money
Logical Structure:
This is a 'paradox resolution' structure. We have seemingly contradictory facts: (1) sales tax brings in less money than property tax, but (2) schools won't necessarily get less funding. The missing piece explains how both can be true - likely involving factors that would increase sales tax revenue or decrease costs.
Prethinking:
Question type:
Logically Completes - We need to find a scenario that explains why switching from property tax to sales tax wouldn't necessarily reduce school funding, even though the sales tax currently brings in less money
Precision of Claims
The key claim is about quantity - specifically that 3% of current retail sales is less than current property tax collection, but school funding might not decrease. We need to focus on scenarios that could change this quantity relationship
Strategy
Look for scenarios that explain how the sales tax could end up generating equal or more revenue than the current property tax, despite the current math showing it would generate less. This could happen if something changes after implementation that increases sales tax revenue or if there are additional factors not considered in the basic calculation
This tells us that people left because of high property taxes, but this doesn't help explain why sales tax revenue would increase enough to match current property tax levels. If anything, fewer residents might mean lower retail sales, making the funding gap worse rather than better.
This directly solves our puzzle! A shopping mall that draws customers from neighboring counties means retail sales in Aroca County will increase significantly. Even though \(3\%\) of current retail sales is less than current property taxes, \(3\%\) of future retail sales (with all the new shoppers) could equal or exceed current property tax revenue. This explains why school funding wouldn't necessarily decrease.
This actually suggests a potential problem for public schools - if parents use property tax savings to send kids to private school, public school enrollment might decrease. While this might reduce costs, it doesn't explain why sales tax revenue would increase to match property tax levels.
This is about who currently pays property taxes, but it doesn't address the core issue of whether sales tax revenue can match property tax revenue. The relationship between homeownership and retail spending isn't clear enough to resolve our puzzle.
This tells us that retailers won't lower their prices to absorb the sales tax, meaning consumers will pay the full \(3\%\) extra. However, this still doesn't explain how the total sales tax revenue would increase enough to match current property tax levels - it just confirms that the \(3\%\) rate will actually be collected.