LSAT 116 | Section 3 | Logical Reasoning: Q15

LR Question 15 Explanation

QUESTION TEXT: In 1975, a province reduced its personal income tax rate by…

QUESTION TYPE: Paradox

ANALYSIS: Despite a lower tax rate, the amount collected from taxes was the same or higher. The distinction between rates and amounts is common on the LSAT. You’ll get more taxes at a 5% rate from a millionaire than from taxes on a minimum wage earner at a 50% rate.

Possible explanations for the strength of tax receipts: A richer society, a larger population, a greater percentage of the population paying taxes, etc.

___________

1. A more prosperous economy leads to more income to tax, and could make up for lower rates.
2. Since more income is being taxed, tax receipts could be higher even if the rate is lower.
3. Since the wealthy will contribute a large amount of taxes, this could offset a decrease in the rate for other taxpayers.
4. CORRECT. This does not help explain anything. It could mean, for example, that sales or gasoline taxes increased. That tells us nothing about income taxes.
5. A larger population will provide more money to be taxed and could bring in more revenues even at a lower rate.

Recap: The question begins with “In 1975, a province reduced its personal income tax rate by”. It is a Paradox question. Learn how to master LSAT Paradox questions on the LSAT Logical Reasoning question types page.