A proposed change to federal income tax laws would eliminate deductions from taxable income for donations a taxpayer has made to charitable and educational institutions. If this change were adopted, wealthy individuals would no longer be permitted such deductions. Therefore, many charitable and institutions would have to reduce services, and some would have to close their doors.
The argument above assumes which of the following?
(A) Without incentives offered by federal income tax laws, at least some wealthy individuals would not donate as much money to charitable and educational institutions as they otherwise would have.
(B) Money contributed by individuals who make their donations because of provisions in the federal tax laws provides the only source of funding for many charitable and educational institutions.
(C) The primary reason for not adopting the proposed change in the federal income tax laws cited above is to protect wealthy individuals from having to pay higher taxes.
(D) Wealthy individuals who donate money to charitable and educational institutions are the only individuals who donate money to such institutions.
(E) Income tax laws should be changed to make donations to charitable and educational institutions the only permissible deductions from taxable income.
This was a tricky question. I was confused between A,B & D. Then, I could eliminate D because it says that Wealthy ind are the only individuals. Hence, there might be some other people there to donate say companies. And so, this assumption might not hold true.
However, I could not choose between A & B. Why is B wrong? Please guide.
Counter against A - even if some wealthy don't donate, then how come that many charitable would reduce services. Are these some wealthy donating to many CI?
Favor for B - so, because the only individuals who donate to CI (because of favorable tax laws now) would stop donating after the change, and hence, the only source of income would disappear. Why is B wrong? Does it imply that if B has to be assumed, then all CIs would have to close doors and not some?
Please clarify.