GMAT Critical Reasoning
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Source: OG
Level: 3
In order to improve the long-term savings rate of its citizens, Levaska's government has decided to introduce special savings accounts. Citizens can save up to $3,000 a year in special accounts without having to pay tax on the interest, unless they withdraw money from the account before they reach the age of sixty-five. If they do withdraw any money before that age, they have to pay tax on the accumulated interest and a penalty.
Which of the following, if true, most seriously threatens the success of the government's plan?
- A The banks and financial institutions where the special accounts will be held lobbied hard for their introduction.
- B Nearly all workers in Levaska can already save money in tax-free accounts through their workplace.
- C For the past ten years, Levaskans have been depositing an ever smaller percentage of their income in long-term savings.
- D Many Levaskans continue to work beyond the age of sixty-five.
- E In certain circumstances, such as a serious illness, the government plans to waive the penalty on early withdrawals from the special accounts.