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Working Paper

Bracket Creep in the Age of Indexing: Have We Solved the Problem?

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Indexation of the personal tax code for price-level changes represent some of the most significant elements of U.S. tax legislation in the 1980s. However, because the indexation provisions do not adjust personal tax-rate schedules contemporaneously, bracket indexation remains incomplete. This paper argues that, even ignoring the remaining problems associated with capital-income measurement, depreciation provisions, and so on, the potential distortionary costs of inflation/tax-system interactions remain high.
06.01.1991ISSN 2573-7953 WP 91-08DOI 10.26509/frbc-wp-199108

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Altig, David, and Charles T. Carlstrom. 1991. “Bracket Creep in the Age of Indexing: Have We Solved the Problem?” Federal Reserve Bank of Cleveland, Working Paper No. 91-08. https://doi.org/10.26509/frbc-wp-199108