Economist: Sales taxes do not provide a fair alternative to income taxes. Low-income households must spend nearly all of their...
GMAT Critical Reasoning : (CR) Questions
Economist: Sales taxes do not provide a fair alternative to income taxes. Low-income households must spend nearly all of their disposable income on consumption items they need to live, while high-income households can afford to buy those items and then put a substantial amount of their earnings into savings. Hence a sales tax
Which of the following most logically completes the argument?
Passage Analysis:
Text from Passage | Analysis |
Economist: Sales taxes do not provide a fair alternative to income taxes. |
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Low-income households must spend nearly all of their disposable income on consumption items they need to live, while high-income households can afford to buy those items and then put a substantial amount of their earnings into savings. |
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Hence a sales tax |
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Argument Flow:
The economist starts with their main position that sales taxes aren't fair, then explains how different income groups spend money differently, and is leading to a conclusion about why sales taxes create unfairness
Main Conclusion:
The passage is incomplete, but the conclusion will explain how sales taxes disproportionately affect different income groups based on their spending patterns
Logical Structure:
The argument uses the different spending behaviors (low-income spends everything, high-income can save) to show that sales taxes will hit these groups differently, making them unfair compared to income taxes
Prethinking:
Question type:
Logically Completes - We need to find the conclusion that logically follows from the premises about spending patterns of different income groups
Precision of Claims
The argument makes specific claims about spending behavior: low-income households spend 'nearly all' disposable income on necessities, while high-income households can afford necessities 'and then put substantial amount into savings'
Strategy
Since this is a 'logically completes' question, we need to find what conclusion naturally follows from the spending pattern differences. The economist argues sales taxes aren't fair because of how different income groups spend money. Low-income people spend almost everything on taxable items, while high-income people can save much of their money (avoiding sales tax on saved portions). So we need a conclusion that explains how this creates unfairness in sales tax burden.