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In order to improve the long-term savings rate of its citizens, Levaska’s government has
decided to introduce special savings accounts. Citizens can save up to $3,000 a year in special
accounts without having to pay tax on the interest, unless they withdraw money from the
account before they reach the age of sixty-five. If they do withdraw any money before that
age, they have to pay tax on the accumulated interest and a penalty.
Which of the following, if true, most seriously threatens the success of the government’s plan?
A. The banks and financial institutions where the special accounts will be held lobbied hard for
their introduction.
B. Nearly all workers in Levaska can already save money in tax-free accounts through their
workplace.
C. For the past ten years, Levaskans have been depositing an ever smaller percentage of their
income in long-term savings.
D. Many Levaskans continue to work beyond the age of sixty-five.
E. In certain circumstances, such as a serious illness, the government plans to waive the
penalty on early withdrawals from the special accounts. |
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