fiscal drag

British  

noun

1. economics the process by which, during inflation, rising incomes draw people into higher tax brackets, so that their real incomes may fall; this acts as a restraint on the expansion of the economy

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Example Sentences

Most significant is fiscal drag, where the thresholds that apply to different rates of tax on income are frozen.

From BBC

He said that rather it marked a step away from fiscal drag – whereby wage inflation reduces the real value of tax-free allowances that do not keep pace – being used as a "deliberate policy of getting public revenue".

From BBC

When those thresholds are frozen, more income is taxed at higher rates as someone's earnings rise, a process known as fiscal drag.

From BBC

This is what is known as fiscal drag.

From BBC

This is what is known as fiscal drag - not a phrase you'll hear talked about much, but it is important.

From BBC