"Bracket Creep" happens when
A)tax liabilities are based on real income and there is a negative inflation rate.
B)tax liabilities are based on real income and there is a positive inflation rate.
C)tax liabilities are based on nominal income and there is a negative inflation rate.
D)tax liabilities are based on nominal income and there is a positive inflation rate.

Question

Quizplus · Accepted Answer

Bracket Creep happens when inflation increases nominal incomes, pushing taxpayers into higher tax brackets, resulting in higher tax liability. Therefore, tax liabilities must be based on nominal income, and there must be a positive inflation rate for Bracket Creep to happen.

"Bracket Creep" Happens When