Self-study
When deciding where to locate or relocate, businesses look for an educated work force, a high level of services, a low business-tax rate, and close proximity to markets and raw materials. ████████ ████████ ████ ██ █████ ██████████████ ███ █████████████ █████ ███████████ ███ ████ ██ █████████ ██████ ██ ███████ ██ ██ ███ █████████ █████ ██████ ██████████████ ██ ████ ███████████ ███████████ ███████ ██████ █ ███████████████████ ████████████ ████ ██████ ███ ████ ███████
Objective: Resolve the Discrepancy
The stimulus tells us four things businesses look for in a location, each with about equal importance: an educated work force, a high level of services, a low business-tax rate, and close proximity to markets and raw materials. However, while municipalities without proximity to markets or raw materials often lose prospective businesses, municipalities with a high business-tax rate do not usually lose prospective businesses. That's our discrepancy: if these factors are equally important, why does their absence not have an equally deterrent effect?
The correct answer will explain why a high business-tax rate is less of a deterrent than a lack of proximity to markets or materials. It might point out benefits that go along with a high business-tax rate, or ways that a business can avoid the cost of having to pay a higher rate. It could also tell us there are additional drawbacks to places far from markets or materials.
4.
Which one of the following, ██ █████ ████ █████ ██ ███████ ███ ████████ ███████████ ██ ███ ██████████ ██████
a
Taxes paid by ██████████ ██████████ ████ █ ████ ██ ███ ███ ███████ █████████ ██ ████ ███████████████
We're not concerned with where municipalities get their money, but with why businesses choose to locate in certain places. (A) doesn't explain why a business would locate somewhere with high taxation.
b
In general, the ██████ ███ ████ ██ █████ ██████████████ ███ ███████████ ███ ████ █████ ██████████████ █████ ██ █████████ ███ ██ █████████ ████████ ██ ███████████
(B) points out benefits that go along with a high business-tax rate: an educated workforce and a high level of services. These are also important to businesses, so it makes sense why they would compromise on tax. It's a necessary sacrifice to get the rest of what they want.
c
Businesses sometimes leave █ ████████████ █████ ████ ████████████ ███ ██████ ███ █████ ██ ███████████
(C) only deepens the discrepancy. If businesses will relocate over a tax increase, why go somewhere with high taxes to begin with?
d
Members of the ████ █████ ███ ███ ██████ ████████ ███ ████ ██████ ██ ██ ███████ ██ ████████ ██ ██████ ████ ████ ███ ████ ██████ ████████ ████████
(D) explains why businesses would want to locate in municipalities with an educated workforce. However, it has no connection to business tax or proximity to markets and materials, so it does nothing to resolve the discrepancy regarding those two factors.
e
Businesses have sometimes █████ ██ ██████ ███ ██████████ ████ ██████████████ ██ ██████████ ████ ███████ ████ █ █████████ ███ ████████ █████ ██ ██████ ██ ████████ ██████████
(E) is a tempting trap answer, but it has a fatal flaw. (E) only tells us that businesses have "tried" to get tax reductions—but we don't know if they've succeeded.
If (E) said reductions were actually common, that would help by reducing the cost of a high business-tax rate. But just knowing that businesses have made the request doesn't get us there.