LSAT 21 | Section 3 | Logical Reasoning: Q11

LR Question 11 Explanation

QUESTION TEXT: Raising the tax rate on essential goods…

QUESTION TYPE: Most Helpful to Know

CONCLUSION: The government wants to tax luxury goods.

REASONING: Taxes on basic goods annoy poorer and middle class people. The government thinks that a new luxury goods tax is a better way to raise money, because it will only affect the wealthy.

ANALYSIS: If you tax luxuries, people often buy less of them. The same isn’t true of basic goods, because people need basic goods.

It would be helpful to know whether sales of luxury items will stay the same or drop. That could affect how much revenue the government will bring in.

___________

1. The overall tax rate doesn’t matter. It only matters whether the luxury goods rate will be higher than it used to be.
2. The government isn’t eliminating the old basic goods tax. It’s just adding a new luxury tax. So it doesn’t matter how much revenue the taxes raise, compared to each other.
    
   It’s only important to know whether the luxury tax will actually lead to a “substantial” increase in revenue.
3. CORRECT. If people buy fewer luxury goods then the tax might not bring in very much revenue.
4. It doesn’t matter if the government wins support amongst those who have less money. The government’s main concern is to avoid annoying them even more.
5. The government doesn’t care whether it gets money from the wealthy or from corporations. It just wants to avoid taxing the poor and middle class.

Recap: The question begins with “Raising the tax rate on essential goods”. It is a Paradox question. Learn how to master LSAT Paradox questions on the LSAT Logical Reasoning question types page.