The Bureau of Labor Statistics reports that one use of the Consumer Price Index is to periodically adjust the federal income tax structure, which sets higher tax rates for higher income brackets. According to the BLS, “these adjustments prevent inflation- induced increases in tax rates, an effect called ‘bracket creep’” (U.S. Dept. of Labor, 2003, CPI website). Explain what is meant by “bracket creep” and how you think the CPI is used to prevent it.
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