Middletown levies its real-estate tax as a percentage of a property's assessed value. Middletown reassessed all properties late last year,...
GMAT Critical Reasoning : (CR) Questions
Middletown levies its real-estate tax as a percentage of a property's assessed value. Middletown reassessed all properties late last year, ensuring that this year's real-estate tax on a given property fairly reflects that property's current value. By comparison with the previous assessment three years ago, the average assessed property value was considerably lower. Nevertheless, the average realestate tax bill sent to Middletown's property owners this year is likely to be no lower than last year's, because.
Which of the following most logically completes the passage?
Passage Analysis:
| Text from Passage | Analysis |
| Middletown levies its real-estate tax as a percentage of a property's assessed value. |
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| Middletown reassessed all properties late last year, ensuring that this year's real-estate tax on a given property fairly reflects that property's current value. |
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| By comparison with the previous assessment three years ago, the average assessed property value was considerably lower. |
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| Nevertheless, the average real-estate tax bill sent to Middletown's property owners this year is likely to be no lower than last year's, because. |
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Argument Flow:
The passage starts by explaining how Middletown's tax system works, then tells us property values have dropped significantly. But here's the weird part - even with lower property values, tax bills aren't expected to drop. The passage is setting up a puzzle that needs an explanation.
Main Conclusion:
Despite property values being considerably lower than three years ago, this year's average real-estate tax bills will likely be no lower than last year's.
Logical Structure:
This is an incomplete argument waiting for the missing piece. We know the tax formula (\(\mathrm{percentage \times assessed\ value}\)) and we know values dropped, so logically taxes should drop too. But the author claims they won't. The 'because' at the end signals we need to find what factor could keep tax bills high despite lower property values - most likely the tax percentage rate increased.
Prethinking:
Question type:
Logically Completes - We need to find what information would logically explain why tax bills won't decrease even though property values dropped considerably.
Precision of Claims
The key claims involve specific quantities and relationships: \(\mathrm{tax = percentage \times assessed\ value}\), property values are 'considerably lower' than 3 years ago, but tax bills will be 'no lower than last year's'
Strategy
Since \(\mathrm{tax = percentage \times assessed\ value}\), and we know assessed values went down considerably, the only way tax bills can stay the same or increase is if the tax percentage rate increased enough to offset the lower property values. We need to find scenarios that explain this apparent contradiction through changes in the tax rate or other factors affecting the total tax calculation.
This talks about how different types of properties (modest vs. valuable) were affected differently by the reassessment. However, this doesn't explain why the average tax bills would stay the same despite overall lower property values. Even if modest properties dropped more than valuable ones, if the average assessment dropped considerably, we'd still expect lower tax bills unless something else changed.
This discusses actual selling prices being higher than assessed values. While this might be interesting market information, it doesn't explain why tax bills won't decrease. Taxes are calculated based on assessed values, not selling prices, so this doesn't resolve our puzzle about why tax bills remain high despite lower assessments.
This predicts economic consequences of declining real-estate values. However, this is talking about future effects rather than explaining the current tax situation. A general economic slowdown doesn't directly explain why tax bills this year won't be lower than last year's despite reduced property values.
This mentions real-estate transactions and ownership changes. While there may have been many transactions, this doesn't explain the mathematical relationship between lower assessed values and unchanged tax bills. New ownership doesn't change how taxes are calculated (percentage of assessed value).
This directly addresses the missing piece of our tax equation puzzle. Since \(\mathrm{tax} = \mathrm{rate} \times \mathrm{assessed\ value}\), and we know assessed values dropped considerably, the only way tax bills can stay the same is if the tax rate increases. This choice explains that the tax rate hasn't been set yet but will probably be higher than last year's rate, which would perfectly explain why lower property values won't result in lower tax bills.