Some economists argue that startup companies in technology sectors benefit significantly from government tax incentives, claiming that regions with fa...
GMAT Information and Ideas : (Ideas) Questions
Some economists argue that startup companies in technology sectors benefit significantly from government tax incentives, claiming that regions with favorable tax policies consistently attract more innovative enterprises and generate higher rates of technological patents. However, critics suggest this relationship may be coincidental rather than causal.
Which finding would most strongly support the economists' argument?
Technology startups in regions with tax incentives tend to have similar employee satisfaction rates as those in regions without such policies.
A comprehensive analysis reveals that patent applications increase substantially within two years of tax incentive implementation across multiple regions.
The methodology for tracking patent applications is discovered to be inconsistent across different geographic regions.
Regions with the most generous tax incentives also tend to have the highest overall cost of living for businesses.
Step 1: Decode and Map the Passage
Part A: Create Passage Analysis Table
| Text from Passage | Analysis |
|---|---|
| 'Some economists argue that startup companies in technology sectors benefit significantly from government tax incentives' |
|
| 'claiming that regions with favorable tax policies consistently attract more innovative enterprises and generate higher rates of technological patents' |
|
| 'However, critics suggest this relationship may be coincidental rather than causal' |
|
Part B: Provide Passage Architecture & Core Elements
Visual Structure Map:
- Economists Argument: Tax incentives lead to benefits for tech startups
- Evidence: More innovative enterprises and higher patent rates
- Critics Challenge: Maybe just coincidence not causation
Main Point: There is a debate between economists who believe tax incentives cause benefits for tech startups and critics who think the relationship might just be coincidental.
Argument Flow: The passage presents economists argument that tax incentives lead to tangible benefits for tech companies citing evidence about innovation and patents. However critics challenge whether this relationship proves causation or just shows correlation.
Step 2: Interpret the Question Precisely
This is a fill-in-the-blank question asking us to choose the best logical connector. The answer must create the right relationship between what comes before and after the blank.
Step 3: Prethink the Answer
- The core issue here is causation versus correlation
- The economists claim tax incentives CAUSE better outcomes while critics say it might just be coincidental
- To support the economists we need evidence that shows a clear causal relationship between tax incentives and the claimed benefits
- The right answer should provide strong evidence that tax incentives actually cause increased innovation or patents not just that they happen to occur together
Technology startups in regions with tax incentives tend to have similar employee satisfaction rates as those in regions without such policies.
✗ Incorrect
- This tells us about employee satisfaction being similar in both types of regions
- This does not help prove that tax incentives cause better outcomes for companies
A comprehensive analysis reveals that patent applications increase substantially within two years of tax incentive implementation across multiple regions.
✓ Correct
- Shows patent applications increasing substantially within two years after tax incentives are implemented
- The timing suggests causation rather than coincidence
- Directly supports economists claim that tax incentives lead to higher patent rates
The methodology for tracking patent applications is discovered to be inconsistent across different geographic regions.
✗ Incorrect
- Points out that the methodology for tracking patents is inconsistent
- This actually weakens any argument about patents by making the data unreliable
Regions with the most generous tax incentives also tend to have the highest overall cost of living for businesses.
✗ Incorrect
- High cost of living might actually work against attracting businesses
- This does not support the idea that tax incentives cause positive outcomes