Tax Bracket Creep and its Effects on Income Distribution ∗

@inproceedings{Heer2013TaxBC,
  title={Tax Bracket Creep and its Effects on Income Distribution ∗},
  author={Burkhard Heer},
  year={2013}
}
  • Burkhard Heer
  • Published 2013
We quantitatively analyze the way inflation alters the inequality of the income distribution in the U.S. economy. The main mechanism emphasized in this paper is the “bracket creep” effect according to which inflation pushes income into higher tax brackets. Governments adjust the nominal income tax brackets slowly and incompletely due to the rise in prices. In the U.S. postwar history, this typically happens less often than once every other tax year. In the first part of the paper, we study time… CONTINUE READING

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