Definition

Noun: - A movement into a higher tax bracket as taxable income increases: This term describes the process where inflation or a raise in salary pushes a taxpayer's income into a higher marginal tax rate bracket, potentially increasing their overall tax burden even if their real purchasing power has not improved proportionally.

Usage

"Bracket creep" is used primarily in economics, finance, and public policy discussions. It refers to an automatic, often unintended consequence of a progressive tax system not indexed to inflation. - The government adjusted the tax thresholds to prevent bracket creep from affecting middle-income families. - Without regular adjustments, bracket creep can act as a hidden tax increase.

Advanced Usage

• Fiscal drag: This is a closely related concept where bracket creep leads to an overall increase in government tax revenue without explicit changes to tax law, slowing economic growth.
  • Analysts warned that fiscal drag caused by bracket creep could dampen consumer spending.

Variants and Related Words

• Tax bracket (n): A range of incomes subject to a particular income tax rate.
• Progressive tax (n): A tax system where the tax rate increases as the taxable amount increases.

Synonyms

• Fiscal drag (in its specific effect on revenue/tax burden)
• Tax creep

Related Phrases

• To be pushed into a higher bracket: A descriptive phrase for the effect of bracket creep.
  • Many salaried employees were pushed into a higher bracket due to annual cost-of-living adjustments.

Noun

1. a movement into a higher tax bracket as taxable income increases