English Language Reading Comprehension (11 – 09 – 2017)

Mentor for Bank Exams
English Language Reading Comprehension (11 – 09 – 2017)
Directions (1 – 10): Read the following passage carefully and answer the questions given below it. Certain words/ phrases are printed in bold to help you to locate them while answering some of the questions.
Apple and the United States are crying foul over the ruling in Europe that Apple received illegal tax breaks from Ireland and must hand over 13 billion euros ($14.5 billion), a record tax penalty in Europe.
But Apple and the United States have only themselves to blame for the situation.
Apple has engaged in increasingly aggressive tax avoidance for at least a decade, including stashing some $100 billion in Ireland without paying taxes on much of it anywhere in the world, according to a Senate investigation in 2013. In a display of arrogance, the company seemed to believe that its arrangements in a known tax haven like Ireland would never be deemed illegal — even as European regulators cracked down in similar cases against such multinational corporations as Starbucks the German chemical giant BASF.
Congress, for its part, has sat idly by as American corporations have indulged, Amazon, Fiat and in increasingly intricate forms of tax avoidance made possible by the interplay of an outmoded corporate tax code and modern globalized finance. The biggest tax dodge in need of reform involves deferral, in which American companies can defer paying taxes on foreign-held profits until those sums are repatriated.
Initially, deferral was a convenience for multinationals, as they sought investment opportunities abroad while lobbying Congress for tax-rate cuts in exchange for repatriating the money. Currently, there is some $2 trillion in corporate profits in offshore tax-deferred accounts; besides Apple, Microsoft, Google, Cisco and Oracle also have large stashes. Apple is one of nearly two dozen major corporations pushing Congress for a “tax holiday,” which would let companies bring back foreign-held money over the course of a year at a discounted tax rate, rather than the current rate, 35 percent.
Before the European ruling on Tuesday, the debate over a tax holiday had pitted Republicans, who have generally favored the idea, against Democrats, who have viewed it as an unjustified reward for tax avoidance. The Democrats have history on their side. A tax holiday in 2005 lowered the corporate rate to 5.25 percent, enticing corporations to repatriate some $300 billion. It was billed as a way to create jobs and increase investment, but the money was used mostly for dividend payments, share buybacks (which tend to raise executive pay) and severance for laid-off employees. Worse, the tax holiday inspired multinationals to stash as much money abroad as they possibly could in anticipation of another holiday.
The European ruling, however, could sharply alter the terms of the congressional debate. Republicans and Democrats alike have always assumed that foreign-held profits would one day be repatriated. The big question was the rate at which they would ultimately be taxed. Similarly, the Treasury assumes that deferred foreign profits will one day be taxed when it projects future revenues — an important measure of the nation’s fiscal health.
But the money won’t be repatriated and taxed under American law if Europeans, in the course of enforcing their own laws against tax havens, get their hands on it first and that in the nutshell is the reason due to which the members of Congress and Treasury officials are not in favour of the Apple ruling. They understand, correctly, that tax-law enforcement in Europe could reduce the sums they expect to collect taxes on someday. What they don’t understand, or aren’t saying, is that they brought the problem on themselves.
The way forward is not to declare a tax war with Europe. It is for Congress to agree on a way to tax foreign-held corporate profits. President Obama put forth a reasonable approach in 2015, when he proposed a mandatory 14 percent tax on multinationals’ current offshore profits — whether they are repatriated or not — and, thereafter, a new minimum tax rate of 19 percent on profits moved offshore. An even better solution would be to simply end indefinite corporate tax deferral, imposing American taxes on profits when they are made.
Republicans rejected Mr. Obama’s proposal in 2015, and there is no chance that lawmakers will engage in such a debate so close to the election. But the next president and Congress will need to act to ensure that at long last,American corporations pay their fair share in taxes.
1. Why deferral is the biggest taproot of global tax avoidance?
A. As deferral has resulted in obliterating the taxes of companies like Apple entirely.
B. As deferral allows them to take their business to foreign soil with less paperwork and regulations.
C. Since a company or an organization which is already being taxed in foreign soil is not taxed in America for the repatriation purposes.
D. As American companies are engineering it to shift the profits into foreign accounts.
E. None of these

2. Which of the following is not true about ‘tax holiday’ in context of the passage?
A. Tax holiday was demanded by the companies on account of creating employment but the money was instead used for their own benefits.
B. Tax holiday encouraged the companies to move the profits to offshore tax-deferred accounts.
C. Democrats were against the tax holiday as the companies were only able to repatriate some $300 billion.
D. Republicans are generally in favour of tax holiday.
E. None of these.

3. Why members of Congress and Treasury offcials are so upset about the Apple ruling?
A. As they feel it is not justified and that it might put the hard earned money of the Americans in peril.
B. The fear of squandering the opportunity of getting their hands on the foreign held profits.
C. As they won’t be able to further slash the taxes and the money will be taxed at the current 35% when it will be finally brought.
D. As it will discourage the corporations in America from doing the business in Europe and thus they won’t be able to repatriate the money.
E. None of these.

4. Which of the following statement(s) is/are true in context of the passage?
(i) The new minimum tax rate after President Obama’s proposal would be 14 percent.
(ii) Apple has largest share in some $2 trillion in corporate profits in offshore tax-deferred accounts.
(iii) The tax holiday in 2005 was a success as it created jobs and increased investment.
A. Only (i).
B. Both (ii) and (iii).
C. Only (iii).
D. Both (i) and (iii).
E. None of these.

5. Why Apple and the United States should be blamed for the situation?
A. As Apple was not made aware of the consequence of its action by the Congress which could have avoided the situation.
B. As apple and Congress neglected all the warnings by the European authorities.
C. For not complying with the rules and regulations of tax system in European countries.
D. As situation is a result of arrogance of Apple and the inactiveness of the Congress to take appropriate measures.
E. For not sorting out the difference between them on tax cut and tax holiday before the European ruling.
6. What according to the author is the best possible step that must be taken by the Congress to approach this situation?
A. The money that is stashed should be taxed at much higher rate than the current rate of 35%.
B. Congress must put an end to the deferral to avoid such situations in future.
C. By accepting the proposal by Obama in which he proposed a mandatory 14 percent tax on multinationals’ current offshore profits.
D. Strict legal actions against the companies that indulge in the activities involving tax avoidance made possible by the interplay of an outmoded corporate tax code and modern globalized finance.
E. None of these
7. Choose the word/group of words which is MOST SIMILAR in meaning to the word/ group of words printed in bold as used in the passage. Stashing
A. Garner
B. Curtailment
C. Exigency
D. Paucity
E. Scantiness

8. Choose the word/group of words which is MOST SIMILAR in meaning to the word/ group of words printed in bold as used in the passage. Enticing
A. Baffle
B. Hamper
C. Enchanting
D. Chagrin
E. Embitter

9. Choose the word/group of words which is MOST OPPOSITE in meaning to the word/ group of words printed in bold as used in the passage. Repatriate
A. Expatriate
B. Rejuvenation
C. Refurbishment
D. Revivification
E. Instauration

10. Choose the word/group of words which is MOST OPPOSITE in meaning to the word/ group of words printed in bold as used in the passage. Worse
A. Amateurish
B. Shoddy
C. Rotten
D. Bewildered
E. Supercalifragilisticexpialidocious

Answers with Explanations:
1. D
Clearly in the 2nd paragraph of the passage the author has explained how the deferral system has increased the stash in offshore tax deferred accounts.
2. C
Democrats weren’t against the repatriation but they viewed deferral as an unjusti􀃒ed reward for tax avoidance also due to the reason that they failed to keep their promise.
3. B
Refer to the 4th paragraph of the passage, “But the money won’t be repatriated and taxed under American law if Europeans, in the course of enforcing their own laws against tax havens, get their hands on it first and that in the nutshell is the reason due to which the members of Congress and Treasury offcials are not in favour of the Apple ruling.”
4. E
None of these is the correct choice. Option (i) is incorrect as the new minimum tax is 19 percent after the proposal. Option (iii) is incorrect as tax holiday wasn’t a complete success as the promises were not kept. Option (ii) is also incorrect as it is not mentioned if apple has the largest stash in the deferred accounts.
5. C
It is mentioned in the passage that Apple’s ignorance due to its arrogance and congress’ idleness is the possible reason for the situation.
6. B
Refer to the last paragraph of the passage, “. An even better solution would be to simply end indefinite corporate tax deferral, imposing American taxes on profits when they are made.”
7. A
Stashing means store (something) safely in a secret place hence garner is the word most similar in meaning which means gather or collect (something, especially information or approval).
8. C
Enticing means attractive or tempting; alluring hence enchanting is the word most similar in meaning which means delightfully charming or attractive.
9. A
Repatriate means return to one's own country hence expatriate is the word most opposite in meaning which means send (a person or money) abroad
10. E
Worse means of poorer quality or lower standard; less good or desirable hence supercalifragilisticexpialidocious is the word most opposite in meaning which means wonderful