-Assume that the government one day decides to tax greens fees at all state golf courses. To the government's dismay, not only was the amount of tax collected small, but there was a 90 percent decline in golfing. What type of tax analysis did the government apparently rely upon when it imposed this tax?

Question

Quizplus · Accepted Answer

Static tax analysis assumes that the base of taxation (in this case, the number of golfers) will not change as a result of the tax. The government's surprise at the decline in golfing suggests they did not anticipate behavioral changes, indicating reliance on static rather than dynamic analysis, which would consider such behavioral adjustments.

-Assume That the Government One Day Decides to Tax Greens