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Fiscal drag - Wikipedia, the free encyclopedia (433 words) |
 | Bracket creep describes the process by which inflation pushes wages and salaries into higher tax brackets. |
| Indexing tax brackets however does not result in CPI adjusted salaries being fully compensated for inflation as CPI adjustments are generally not distinguished from other income and so are taxed at the highest marginal tax rate. |
| Many voters do not perceive the effects of fiscal drag, and so the government may prefer to adjust tax brackets manually once every few years - in effect restoring the real tax rates to their pre-inflation levels, but in a way that makes the government seem like they are giving the taxpayer an additional benefit. |
| Let's Talk Taxes - Bracket Creep: Fifth Column Taxation (846 words) |
| The bracket creep tax raid is the difference between the income taxes you pay now and the taxes you would have paid if tax brackets and the basic personal exemption (BPE) were indexed to inflation. |
| This phenomenon, known as bracket creep, amounts to taxation without representation, given that the transition to partial indexation was not put before parliament. |
| Bracket creep is the fastest growing tax in the land and it outstrips federal and provincial tax cuts combined. |
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