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 that introduced the luxury tax also earmarked the anticipated new revenue for funding public education programs across the country.
- Several domestic luxury retailers raised their pre-tax sticker prices in clear anticipation of the new tax taking effect later in the year.
- The richest citizens of Veritas began purchasing their luxury goods in neighboring countries with lower tax rates.
- Wealth inequality in Veritas, by most standard measures, has been steadily increasing for well over a decade now.
- The official definition of 'luxury goods' used by the government was broadened this year to include a range of mid-range consumer electronics.
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