Financial Advisor: Our city will soon replace its tiered residential property tax system with a single flat-rate residential property tax. Ten years ago, the neighboring municipality of Mapleton replaced its tiered commercial tax system with a flat commercial tax. Following that change, Mapleton saw a dramatic reduction in administrative costs and a surge in new commercial investments. Therefore, adopting a flat residential property tax in our city will similarly reduce administrative costs and spur new residential investments.
Which one of the following, if true, most seriously weakens the financial advisor's argument?
- AUnder a flat-rate system, owners of high-value residential properties will pay the exact same percentage as other owners, but they will still pay a much larger overall sum of money.
- BThe administrative costs associated with Mapleton's commercial tax system did not actually decrease after the flat tax was implemented.
- Unlike commercial tax complexity, which arises primarily from applying tiered rates to various revenue streams, residential property tax complexity stems entirely from assessing the base value of the properties themselves.Answer
- DThe municipality of Mapleton has a slightly larger geographic area and a significantly different demographic makeup than the financial advisor's city.
- EA recent survey of residents in the financial advisor's city indicates that the vast majority are satisfied with the current tiered residential property tax system.
Answer
The correct answer is the option stating that residential property tax complexity stems entirely from assessing the base value of the properties themselves, unlike commercial tax complexity.
The correct answer directly attacks the analogy by pointing out a relevant difference between commercial taxes and residential taxes. If the administrative burden of residential taxes comes from assessing the value of the properties rather than calculating the rates, then switching to a flat rate will not solve the administrative burden. This severs the causal link implied by the comparison to Mapleton's commercial tax change.
Step-by-Step Solution
Key Concept
Evaluating Arguments by Analogy
Estimated Time:1m 30s