Self-study
Passage A.
P1
██ █████ ███████ ██████ ███ █████ ███████ ██ █████████ █ █████ ████ ██ ████████ ███ █████████ ███████ ██████ ██ █████ ██ █ ██████ ███████ ████ ██ ██ ████████ ██ ████████ ██ ██████ ██ ███████████ ██ ███ █████ █████████ ████ ████████ █████████ ████████ ███
Intro to Topic ·
Flat Tax
E.g., you earn $100; the flat tax rate is 26%; you pay $26 dollars in tax; you take home $74.
Conclusion ·
Flat tax works pretty well
P2
█████████ █████ ███ ████ ████ ████ █████ ██████ ████ █████ █ ███████ ███████ ██████████ ████ ████ ███ █████ ████ █████ ████████ ███████ ████ ████ ███ ███████ ███████████ ██████████ ██ ██ ███████ ████ █████████████ ███ ████████ █████████ ███████████ ███████ ██ ███████ █ ██████ █████ ██ █████ ███████ ██ ███ ████ ██████████ ███████ ████ ██ ████ █ ████ ███ █████ ██ ████ ████ ███ ██ ██████████
Critics ·
Flat tax may work but is unfair
A more fair system is "progressive" which requires high-income earners to pay a bigger share.
P3
███ ███ █ ████ ███ ██ ████████ ███████ ████████ █ █████████ █████ ███ ██ ██████ ███████ ████ █ ██████ ████ ██ ███ ██ ███ ██████ █████ ███ ███ ██████ ██ █████ ████ █ ██████ ██ ███████████ ███ ██ ██████ ██████ ████ ██████ █████ ████ █████ ███ ██████████ ███
Author's Rebuttal ·
Flat tax + threshold can be fair
E.g., say the threshold for exemption is $20; you earn $20; you pay $0 in tax; but say you earn $120; your first $20 is exempt from tax; the next $100 is taxed at 26%; so you pay $26 in taxes; you take home $94.
Author's Rebuttal ·
Flat tax brings in similar amounts from high earners
"Progressive" tax systems are complex resulting in high earners finding various ways to avoid tax. A flat tax system combined with an exempt amount threshold can deliver similar tax results and is much simpler.
███████ █
P4
█ ███ ██ ██████ █████ ██████████ ██████████ ██ ███████ ██ ███████ ██████ ████ █████ ████ ██ ███ ████ ████ █████ ███ ███ █ ██████ ████ ██ ████ ██████ █████████ █████ █████ ███████ █████████ █████████ ███████████ █████ █████ ███ █████████ ████████ █████ ████████ ████ ███ ████ ████ ██ ██████████ ██████ ██ ███████ ██████ ██ ██████ ████████ █████ ███ ███ ██████ ████ ██ █████ ██████ ███████ ████ ██ ███ ███████ ██ ██████ ████ █ █████████ ███████ ███████ ███ ████████ ███ ███████ ████████
Progressive Tax is Misunderstood ·
Tax rate is the same on each layer of income
E.g. everyone pays the same low rate on the first, say, $100 of income; then everyone pays the same higher rate on the next, say, $100 of income; then everyone pays the same even higher rate on the next $100 of income. If you only make $100, you only pay the first low rate. If you make $300, then you split your $300 into three layers. You'll pay the first low rate on the first $100 layer; the next higher rate on the next $100; the next even higher rate on the final $100.
P5
███ ██████ ███ ███████ ██████ ███ ███ ███ ███████ ███ ███████ ██████ ████████ ██ ███ ███████ ████ ██ ██████ ████████ ███ ████████ ████████ ████ ██ █████ ████████ ███ █████████ ██ ████ ██████ █████ ██████ ██ █████████ ████ █ █████ ██████████ ██████ ██████████ ███████ ██ ███████ ██ █████ █████████████ ███████ ███ █████ ████ █████████ ██ █████████ ███ ████ ████ ███████ ███████████ ██ █████████ █████ ████████████ ██ ███████
Premise ·
Lower layers of income are more important
Because lower layers of income go to pay for essentials.
P6
████ ████ ██ ███ ████ ███ █████████ █████████ █████ ███ ████ ██ ██████ █ ███████ █████ ████ ███ ███ ███████ ███ █████ ████ █████████ ████ ████████ ███████ ███ █████████ ████ █████████████ ████████ ███ ██ ████████ ████ ███ ███████ ███████ ██ ██████ ██ ███ █████ ███████ ███ ███ ██████ █████ ████ ███ █████████ ███ ████████ ██ █████ ██ ███ ████ █████ ██████ ██ ███ ████████ ██ ███ ███████ ████ ███ █████ ██ ███ ████ ███ ███ ███████████ ███████ ███ █████ ██ ███ █████ ██ ██ █████████ █████ ██ ████ ██ ███ ██████ █████ ██ ████ ██ ███ ███████████
Conclusion ·
Progressive tax is better
Flat tax is just an extreme version of progressive tax where there is only one layer of "progression." It goes straight from exempt to full tax. It's better to add in more layers of gradation.
Passage Style
27.
Which one of the following, ██ █████ █████ ██ ███ ████ ██████████ ████████ ███ ███ ██████ ██ ███████ █ ██ ████ ██ ███ █████ ████████ ██ ███████ ██
a
Even under a ████████ ███████ ██ ████ ██ ████████ ███ ████ ████ ████ ███████ ██ █████ █████ ██ ██████████████ █████ ████████
This isn’t a reasonable response, because Passage A never argues that high-income earners cannot underreport their incomes under a flat-tax regime. Rather, Passage A suggests that there would be less incentive and opportunity to avoid taxes under a flat-tax regime compared to a progressive-tax regime.
b
Existing tax codes █████ ███ █████████ ██ █████ ████ ████ ███████ ██████ ███████ ████ ███████ █████████ ███ ███████ ███████████ ███ ███████ ████ ███ ██████████
This is the most reasonable response. Passage A doesn’t successfully establish that the incentives and opportunities to avoid taxes under developed countries’ systems are due to the progressive nature of the tax system. Rather, they could be due to the complexity of the system. But if we could reduce the opportunities for high-income earners to avoid taxes by doing what (B) describes, this undermines Passage A’s argument. Perhaps high-income earners could end up paying more under a flat-tax system if loopholes and special deductions were eliminated.
c
It is unfair ██ █████ ████ ████ ███████ ██ ██████ ████ ███ ██ ███ █████████ █████ ██████ ██ ███ ██████ ██████ ████ ████ █████ ██ ███ ██ █████ ██████ █████████ ██████████
This isn’t a reasonable response, because Passage A never suggests that only high-income earners avoid taxes. Also, the issue is whether high-income earners would end up paying more under a flat tax system. Whether it’s “fair” to focus on them as tax avoiders is a separate issue.
d
Most taxpayers prefer █ ██████ ████ ███████ ████ █████████████ ███ ████████ █████ ████ ███ ████ ████ ███ ██████ ████ ██████████████
This isn’t a reasonable response, because neither Passage A nor Passage B suggest that the preferences of taxpayers are relevant to the choice of what kind of tax system to implement.
e
The goal of ████████ ███ █████████ █████ ██ ████████ ██ ███████████ ██████ █████ ██████████ ██ █████ ██ █████ ██ ███████████ ██ █████ ███ █████████
This isn’t a reasonable response, because Passage B doesn’t suggest she’s in favor of eliminating income taxes altogether. Passage B argues in favor of progressive taxes.