bracket creep

Definitions

1. 1

   The move towards increased taxation when an inflation adjustment to a wage or salary…

   The move towards increased taxation when an inflation adjustment to a wage or salary pushes a taxpayer into a higher tax bracket (or, in a progressive taxation regime, further into a bracket).

   • The corporate tax is essentially a flat-rate tax; thus there is no bracket creep.
   • Bracket creep, however, was occurring only among individuals, not corporations. All other things being equal, this bracket creep increased the extent to which borrowing would be undertaken by individuals, not corporations.
   • 2001, Frederick C. v N. Fourie, How to Think and Reason in Macroeconomics, 2nd edition, page 290, Bracket creep can be avoided by regularly adjusting tax brackets for inflation, so that the tax brackets remain unchanged in real terms.

The neighborhood