LSAT 130 – Section 3 – Question 25

LSAT 130 - Section 3 - Question 25

September 2009

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Question
QuickView		 Type Tags Answer
Choices		 Curve Question
Difficulty		 Psg/Game/S
Difficulty		 Explanation
PT130 S3 Q25
+LR
+Exp
Main conclusion or main point +MC
Net Effect +NetEff
A
4%
156
B
3%
156
C
5%
156
D
5%
156
E
84%
164
142
150
158
 +Medium 145.135 +SubsectionEasier

Economist: Although obviously cuts in personal income tax rates for the upper income brackets disproportionately benefit the wealthy, across-the-board cuts for all brackets tend to have a similar effect. Personal income tax rates are progressive (i.e., graduated), and if total revenue remains constant, then across-the-board cuts in these taxes require increasing the amount of revenue generated through nonprogressive taxes, thereby favoring the wealthy. Yet if nonprogressive taxes are not increased to compensate for the cuts, then the budget deficit will increase, requiring more government borrowing and driving up interest rates. This favors those who have money to lend, once again benefiting primarily the wealthy.

Summarize Argument
Tax cuts across all income brackets tend to benefit the wealthy. Why does this happen? To keep revenue the same, tax cuts on income require revenue to be generated with other, non-progressive taxes. Non-progressive taxes benefit the wealthy. Alternatively, if revenue is allowed to decrease, the budget deficit will increase. This means government borrowing will have to increase, which causes interest rates to increase. Increased interest rates also benefit the wealthy, because they have money to lend. Either result of across the board tax cuts ends up benefitting the wealthy.

Identify Conclusion
The conclusion is the authors claim that income taxes for all brackets disproportionately benefit the wealthy: “across-the-board cuts for all brackets tend to have a similar effect.”

A
Cuts in personal income tax rates for upper income brackets benefit the wealthy more than they benefit others.
This is context that sets up the authors argument about the results of across-the-board cuts for all brackets.
B
Across-the-board cuts in personal income tax rates do not generate enough additional economic activity to prevent a net loss of revenue.
This is not contained in the stimulus. There is no discussion of generating economic activity.
C
It is the wealthy who are favored by generating a high amount of revenue through nonprogressive taxes.
This is a premise that supports the claim that across the board tax cuts ultimately end up benefitting the wealthy. It shows how it occurs.
D
It is primarily the wealthy who benefit from increases in the budget deficit, which drive up interest rates.
This is another premise that supports the claim that across the board tax cuts ultimately end up benefitting the wealthy. It shows how it occurs.
E
Across-the-board personal income tax rate cuts generally benefit the wealthy more than they benefit others.
This accurately paraphrases the conclusion. The author is demonstrating that across-the-board cuts for all brackets benefit the wealthy. Benefitting the wealthy is the “similar effect” the conclusion refers to.

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LSAT PrepTest 130 Explanations

Section 1 - Logical Reasoning

Section 2 - Reading Comprehension

Section 3 - Logical Reasoning

Section 4 - Logical Reasoning

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