Suppose that Tom's income increases by the rate of inflation and pushes him into a higher tax bracket. This is an example of:

Question

Quizplus · Accepted Answer

Bracket creep occurs when inflation pushes income into higher tax brackets, resulting in an increase in income taxes without an actual increase in real purchasing power. This is not a result of a real increase in earnings but rather the effect of inflation on the tax system.

Suppose That Tom's Income Increases by the Rate of Inflation