What occurs when inflation pushes individuals into higher tax brackets, causing them to pay more tax? Group of answer choices Cost-push inflation Demand-pull inflation Bracket creep Inflationary spiral
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" Bracket creep occurs when inflation increases individuals' nominal incomes, pushing them into higher tax brackets without a real increase in their purchasing power. Show more…
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Income tax brackets were not indexed until 2000 . When inflation pushed up people's nominal incomes during the $1970 \mathrm{s}$, what do you think happened to real tax revenue? (Hint: This phenomenon was known as "bracket creep.")
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Inflation acts like a tax because: It takes income and wealth from some people and gives it to others. The government tends to benefit during periods of inflation. Everyone loses purchasing power during periods of inflation just like everyone must pay taxes. Inflation pushes everyone into higher tax brackets.
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