hard · GMAT Verbal
Full Argument: In the country of Veritas, the government recently increased the tax on luxury goods. Proponents of the tax argued that it would reduce wealth inequality by collecting more revenue from the richest citizens. However, six months after the tax was implemented, total tax revenue from luxury goods decreased, and the domestic luxury goods industry reported a 30% decline in sales.
Which of the following, if true, most helps to resolve the apparent discrepancy?
- The government plan included a provision to use the new tax revenue to fund public education.
- Several domestic luxury retailers raised their pre-tax prices in anticipation of the new tax.
- The richest citizens of Veritas began purchasing their luxury goods in neighboring countries with lower tax rates.
- Wealth inequality in Veritas has been steadily increasing for over a decade.
- The definition of 'luxury goods' used by the government was expanded to include mid-range electronics.
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