In order to raise revenue, the federal government planned a tax amnesty program that allows tax delinquents to pay all owed tax without added financial penalty. However, economists projected that the federal government would collect a far lower percentage of total tax owed by delinquents than did state governments implementing similar programs.
Which of the following, if true, would most contribute to an explanation of the economists' projections?
In order to raise revenue, the federal government planned a tax amnesty program that allows tax delinquents to pay all owed tax without added financial penalty. However, economists projected that the federal government would collect a far lower percentage of total tax owed by delinquents than did state governments implementing similar programs.
Which of the following, if true, would most contribute to an explanation of the economists’ projections?
A.Tax amnesty programs are only successful if they are widely publicized.
B.Most people who honestly pay their state tax are equally honest in paying their federal tax.
C.Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.
D.The state tax rate varies considerably from state to state, but the federal tax is levied according to laws which apply to citizens of all the states.
E.Unlike most federal tax delinquents, most state tax delinquents fail to pay state tax because of an oversight rather than a decision not to pay.
Premise: The federal government planned a tax amnesty program that allows tax delinquents to pay all owed tax without added financial penalty.
Conclusion: Economists projected that the federal government would collect a far lower percentage of total tax owed by delinquents than did state governments implementing similar programs.
E is right since it says that the delinquents in State tax are simply forgetting to pay while the delinguqents in Federal tax are determined NOT to pay. If this is true, even if the penalty is removed, those who evaded federal tax will not pay the Federal tax since they have made up their mind not to.