The Mayor of Stuckeyville is considering increasing the tax on bowling. He is confident that tax revenues will increase but recognizes the possibility that they may decrease. The mayor is engaging in

Question

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The Mayor is considering the possibility of increased tax revenues but also recognizes the potential for decreased revenues. This indicates that he is using a dynamic tax analysis approach, where he is examining the potential outcomes and adjusting his approach accordingly. Static tax analysis only looks at the direct impact of tax changes and does not consider potential changes in behavior that may affect tax revenues. The Mayor's policy may or may not cause the tax base to increase or remain unchanged, but that is not the determining factor in this scenario.

The Mayor of Stuckeyville Is Considering Increasing the Tax on Bowling