The total market value of real estate in Altonville has steadily declined over the past four years. This decline has...
GMAT Critical Reasoning : (CR) Questions
The total market value of real estate in Altonville has steadily declined over the past four years. This decline has meant that the overall figure on which the city's property tax is based—the assessed value of that real estate—has also declined. Moreover, the percentage of assessed value that was paid as property taxes to the city did not change during this period.
The information above most strongly supports which of the following?
| Passage Statement | Visualization and Linkage |
|---|---|
| The total market value of real estate in Altonville has steadily declined over the past four years. | Establishes: Downward trend in property values Example:
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| This decline has meant that the overall figure on which the city's property tax is based—the assessed value of that real estate—has also declined. | Establishes: Direct correlation between market value and assessed value Example:
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| Moreover, the percentage of assessed value that was paid as property taxes to the city did not change during this period. | Establishes: Constant tax rate despite declining base Example (assuming 5% tax rate):
Critical Pattern: Same percentage applied to shrinking base = declining total revenue |
| Overall Implication | Mathematical Certainty: When a constant percentage is applied to a declining base, the absolute result must decrease. Formula: \(\mathrm{Tax\ Revenue} = \mathrm{Assessed\ Value} \times \mathrm{Tax\ Rate}\)
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Valid Inferences
Inference: The total amount of property tax revenue collected by Altonville has declined over the past four years.
Supporting Logic: Since the assessed value of real estate has declined and the percentage of assessed value paid as property taxes remained constant, the total tax revenue must have mathematically decreased. When you apply the same percentage rate to a smaller base amount, you inevitably get a smaller absolute result.
Clarification Note: This inference focuses on total revenue amounts, not tax rates or percentages, and follows directly from the mathematical relationship established in the passage without requiring speculation about city policies or external factors.
This choice makes a claim about property taxes being the majority source of city revenue. However, the passage gives us no information about Altonville's total revenue sources or what percentage property taxes represent of the city's overall budget. We cannot infer anything about the relative importance of property tax revenue compared to other revenue sources.
This choice requires us to know both the property tax revenue trends AND the trends in total city revenue from all sources. While we can determine that property tax revenue declined, we have no information about whether other revenue sources increased, decreased, or stayed the same. Without knowing the total revenue picture, we cannot determine if property taxes maintained the same percentage share.
This choice speculates about political decisions and community opposition that are completely outside the scope of the passage. The passage tells us the tax rate didn't change, but it provides no information about whether rate increases were proposed, considered, or opposed.
This choice follows directly from the mathematical relationship established in the passage. We know that: (1) assessed values declined, (2) tax rates stayed constant, and (3) \(\mathrm{tax\ revenue} = \mathrm{assessed\ value} \times \mathrm{tax\ rate}\). When a constant percentage is applied to a declining base, the absolute result must decrease. This is a logically necessary conclusion based on the given information.
This choice introduces information about other types of taxes (sales tax, business profits tax) that are completely outside the scope of the passage. The passage focuses exclusively on property taxes and provides no information about any other revenue sources or tax policies.