Tax indexation
A)Decreases (or eliminates) bracket creep
B)Results in unlegislated tax increases
C)Provides adjustments in standard deductions and tax brackets only
D)Provides adjustments tied to changes in the Index of Leading Economic Indicators

Question

Quizplus · Accepted Answer

Tax indexation adjusts tax brackets, deductions, and other provisions to account for inflation, which can cause bracket creep where taxpayers are pushed into higher tax brackets even though their real income has not increased. Indexation helps to prevent this, leading to a fairer tax system. It does not result in unlegislated tax increases, as any adjustments made to the tax code through indexation are a result of inflation or other economic factors. It is not tied to changes in the Index of Leading Economic Indicators.

Tax Indexation