# Fiscal Drag

*Taxes — Finicade finance glossary*

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.

**Also known as:** bracket creep, stealth tax

**Related terms:** [Tax Bracket](https://finicade.com/glossary/tax-bracket), [Inflation](https://finicade.com/glossary/inflation), [Marginal Tax Rate](https://finicade.com/glossary/marginal-tax-rate), [Real Wages](https://finicade.com/glossary/real-wages), [Progressive Tax](https://finicade.com/glossary/progressive-tax)

Source: https://finicade.com/glossary/fiscal-drag