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Taxes

Fiscal Drag

Also called: bracket creep, stealth tax

Fiscal drag is inflation pushing incomes into higher tax brackets when thresholds aren't indexed, raising effective tax rates without any law changing. It's politically convenient precisely because it's invisible: a frozen threshold raises revenue every year while no one votes for a tax rise. Countries that index brackets to inflation eliminate it; those that freeze thresholds for multiple years use it deliberately.

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