Economics of Fiscal Drag
- AS, A-Level, IB
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 4 Mar 2021
This short revision video focuses on the concept of fiscal drag.
Fiscal drag happens when rising incomes – perhaps due to wages following prices higher pushes or drags millions of taxpayers into the higher marginal tax rate brackets. Therefore, fiscal drag has the effect of raising government tax revenue without explicitly raising tax rates.