GRE Question of the Day (November 27)

Verbal

According to some people, income tax should be done away with in the US since there are several other ways to collect taxes. A few countries in Europe have successfully abolished income taxes by raising other taxes such as sales tax. Of course this makes products more expensive but with the added amount of money you would receive on your paycheck, you will still be better off than you were paying income taxes.

Which of the following, if true, provides the most support for the argument above?

(A) The prices of products in European countries, when converted into US dollars at current rates are very similar to their prices in the United States.
(B) The increase in prices of products because of the increased sales tax rate will not more than offset the benefit of not paying any income taxes.
(C) The legislative body in the United States has stated that it will support the move to abolish income tax.
(D) Apart from increasing sales tax, the government can also increase other special taxes such as those on petroleum products.
(E) The government has enough funds in reserve currently to be able to absorb any shock because of lowered tax collection.

Correct Answer - B - (click and drag your mouse to see the answer)

Question Discussion & Explanation