fiscal drag

British

noun

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

"Collins English Dictionary — Complete & Unabridged" 2012 Digital Edition © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins Publishers 1998, 2000, 2003, 2005, 2006, 2007, 2009, 2012

Example Sentences

Examples are provided to illustrate real-world usage of words in context. Any opinions expressed do not reflect the views of Dictionary.com.

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

Despite most of the bands remaining static, more people will pay a higher rate of tax due to "fiscal drag".

From BBC

Definitions and idiom definitions from Dictionary.com Unabridged, based on the Random House Unabridged Dictionary, © Random House, Inc. 2023