fiscal drag


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Related to fiscal drag: Contractionary fiscal policy

fiscal drag

n
(Economics) 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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In our view, the combination of the sequester and previously enacted higher taxes will create a fiscal drag of over 2% on US gross domestic product for 2013.
The results were not, however, anything like an endorsement of the Chancellor as 22 per cent said he would be best remembered for removing the dividend tax credit for pension funds and 16 per cent said it would be for raising the tax burden through fiscal drag.
Resumed fiscal drag after 1989 and expenditure restraint would imply that policy might cease to support activity in 1990 and 1991.
Capital spending, exports and the consumer drive the economy, overcoming fiscal drag.
The compromise will still produce a modest fiscal drag, fails to address the longer-term fiscal challenges facing the United States, and leaves the debt ceiling as an unresolved, near-term issue.
Real' increases are unlikely so fiscal drag will bring more income into the higher tax bracket.
Fiscal policy may be slightly expansionary in 1990, after a broadly neutral fiscal stance in 1989, as tax relief for families and compensation for fiscal drag come into effect.
Fiscal drag brings in most of the extra revenue he needs without inventing new taxes or upping the rates on old ones.
Freezing allowances - known as fiscal drag - is likely to play an important role.
Despite an expected further lowering of marginal taxes, fiscal policy may become more restrictive in 1990, as the measures mentioned above have their full-year impact and fiscal drag almost offsets the lowering of marginal tax rates.
Tax relief for families and compensation for fiscal drag come into effect in 1990 and will add to disposable household incomes.
Fiscal drag comes to mindI understand that the revenues to the Treasury have risen from 32 percent of GDP the nearer 50 percent, among the highest of the industrialised nations.