Statement–Argument (Income Tax Structure): Statement: Should there be a single uniform rate of income tax irrespective of income level? Arguments: I) Yes, this will substantially reduce the workload of income-tax officials. II) No, this will reduce government tax collection to a large extent. Choose which argument is strong.

Difficulty: Medium

Correct Answer: if only Argument II is strong

Explanation:


Introduction / Context:
Statement–Argument questions ask which argument is “strong,” meaning specific, relevant to policy goals, and supported by plausible causal reasoning. Here the proposal is a flat, single tax rate regardless of income.



Given Data / Assumptions:

  • The tax system must fund public goods while balancing equity, efficiency, and administrability.
  • Argument I claims administrative simplicity (less official workload).
  • Argument II claims a substantial fall in government revenue if progressivity is removed.


Concept / Approach:
A strong argument should link the proposal to key fiscal objectives—revenue sufficiency and equity—rather than a narrow, secondary convenience. Administrative ease is desirable but cannot trump the primary purpose of taxation: adequate and fairly distributed revenue.



Step-by-Step Solution:
Assess I: Reduced workload is a side benefit and not decisive; it does not evaluate fiscal adequacy or equity.Assess II: Progressive structures typically collect more from higher earners; a single low/medium rate risks under-collection. This directly addresses fiscal sufficiency and distribution.Conclusion: II is strong; I is weak in policy weight.



Verification / Alternative check:
If a single rate were calibrated very high, it could maintain revenue but would likely create other distortions. The argument as framed (likely revenue shortfall) remains the more policy-relevant concern.



Why Other Options Are Wrong:
“Either” equates unlike strengths; “neither” ignores II's fiscal salience; “only I” overvalues convenience.



Common Pitfalls:
Confusing administrative simplicity with policy soundness; ignoring equity and elasticity of tax bases.



Final Answer:
if only Argument II is strong.

More Questions from Statement and Argument

Discussion & Comments

No comments yet. Be the first to comment!
Join Discussion