GMAT CR Inference - American Tax Rates

During world war 1 and 2, the top income tax rate jumped to 77% and 94% respectively.  From 1950 to 1980, the tax rates remained above 70%. When the United States faced an unprecedented recession from July 1981, the republicans sponsored the Economic Recovery Tax Act of 1981 that cut the top tax rate to 50%.  The Tax Reform Act led by Republic president Nixon in 1986, broadened the tax based and dropped the tax rate to 28% from 1988. The recession of 1990 triggered by the Kuwait war and the Federal Reserve’s decision to hike the interest rate, pushed the republican government to increase the top income tax rate to 39.6%.

In 2013, with a slow economic recovery from the 2009 Financial crisis, the Democratic government initiated The American Taxpayer Relief Act of 2012 that increased the income tax rate to 39.6% with the Affordable Care Act adding an additional 3.8%, taking the total effective Federal income tax rate to 43.4%. In 2018, citing a strong economy, Donald Trump – the Republican president, slashed the maximum income tax to 40.8%

What can be inferred about the change in the income tax rate for top earners?

a) A republican government ...

b) Governments led by ...

c) An increase in...

d) A democratic government is ...

e) The maximum tax rate...

Answer and Explanation in F1GMAT's Mastering GMAT Critical Reasoning

Mastering GMAT Critical Reasoning (2019 Edition)


1) Introduction   
2) 6 Step Strategy to solve GMAT Critical Reasoning Questions   
3) How to overcome flawed thinking in GMAT Critical Reasoning?   
4) 4 GMAT Critical Reasoning Fallacies   
5) Generalization in GMAT Critical Reasoning   
6) Inconsistencies in Arguments   
7) Eliminate Out of Scope answer choices using Necessary and Sufficient Conditions   
8) Ad Hominem in GMAT Critical Reasoning   
9) Slippery Slope in GMAT Critical Reasoning   
10) Affirming the Consequent – GMAT Critical Reasoning   
11) How to Paraphrase GMAT Critical Reasoning Question   
12) How to Answer Assumption Question Type   
13) How to Answer Conclusion Question Type   
14) How to Answer Inference Question Type   
15) How to Answer Strengthen Question Type   
16) How to Answer Weaken Question Type   
17) How to Answer bold-faced and Summary Question Types   
18) How to Answer Parallel Reasoning Questions   
19) How to Answer the Fill in the Blanks Question   
Question Bank   
Question 1: 5G Technology (Inference)   
Question 2: Water Purifier vs. Minerals (Fill in the Blanks)   
Question 3: Opioid Abuse (Strengthens)   
Question 4: Abe and Japan’s Economy (Inference)   
Question 5: Indians and Pulse Import (Weakens)   
Question 6: Retail Chains in Latin America (Assumption)   
Question 7: American Tax Rates – Republican vs. Democrats (Inference)   
Question 8: AI – China vs the US (Weakens)   
Question 9: Phone Snooping (Strengthens)   
Question 10:  Traditional Lawns (Assumption)   
Question 11:  Appraisal-Tendency Framework (Inference)   
Question 12:  Meta-Analysis of Diet Trials (Weakens)   
Question 13:  Biases in AI (Strengthens)   
Question 14:  Stock Price and Effectiveness of Leadership (Inference)   
Question 15:  US Border Wall (Weakens)   
Question 16:  Driverless Car and Pollution (Assumption)   
Question 17:  Climate Change (Inference)   
Question 18:  Rent a Furniture (Weakens)   
Question 19:  Marathon Performance and Customized Shoes (Weakens)   
Question 20:  Guaranteed Basic Income (Assumption)   
Question 21:  Brexit (Infer)   
Question 22:  AB vs Traditional Hotels (Assumption)   
Question 23:  Tax Incentive and Job Creation (Weakens)   
Question 24:  Obesity and Sleeve Gastrectomy (Inference)   
Question 25:  Recruiting Executives (Weaken)   

Answers with Detailed Explanation

Download Mastering GMAT Critical Reasoning (2019 Edition)

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