Read the following passage and answer the item that follows. Your answer to this item should be based on the passage only.

People invest in upgrading their skills whenever they are able to fully keep the returns those skills bring. This is for the obvious reason that the payoff from a skill rises as the freedom to keep its rewards rises. When people, thanks to lower tax rates, are allowed to retain most of the extra income each additional skill brings, it makes clear sense to keep investing in skills. On the other hand, when the government taxes the higher income of skilled workers at even higher rates, it makes very little sense to invest in acquiring further skills. The same incentives apply to firms deciding whether to train their employees.

With reference to the above passage, the following assumptions have been made:

1. Lower tax rates invariably translate into greater investment in workforce skills.

2. Investment in employee training ensures a firm's long-term profitability.

3. Freedom to retain the rewards of a skill has a positive impact on building human capital.

Which of the above assumptions is/are valid?