Question

Jon consulted with an accountant to prepare his tax return. He recommended the accountant to his friend saying that this year, the amount he paid in taxes was 150% less than last year. Is Jon's conclusion valid?

Answer 1

Answer:

Jon's conclusion is not valid.

Explanation:

To a particular extent the tax to be paid by a person can be minimum 0. It can never happen that the tax is negative and tax department pays back to the client, with no tax liability.

Jon contends that from the previous year the tax paid by him is less by 150%, which cannot be true as the tax amount can be reduced by 100% making tax = 0.

Assuming tax paid last year = $100

Tax paid in current year = $100 - $100 $\times$ 150%

= $100 - $150 = -$50

It means tax paid is negative $50, that concludes tax department paid $50 to Jon, which cannot be true.

Thus, Jon's conclusion is not valid.