If income tax rates are based on nominal income,as inflation increases,taxpayers will see:

Question

Quizplus · Accepted Answer

If income tax rates are based on nominal income and inflation increases, taxpayers' nominal income will also increase. However, even though their real income may not have changed, their tax burden will increase because their nominal income has increased. This is because tax rates are not adjusted for inflation, resulting in taxpayers paying higher taxes on the same real income.

If Income Tax Rates Are Based on Nominal Income,as Inflation