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Your raise matches inflation and the state still takes more.

If wages rise with inflation while the brackets of a progressive tax schedule stay put, you slide into higher zones even though your purchasing power is unchanged. This bracket creep is called a hidden tax rise, because it works without any new law.

Useful: That is why governments periodically shift the schedule – without such an adjustment, the tax burden climbs by itself.

Source: de.wikipedia.org

InflationLohnSteuern

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Question on this card

What is bracket creep?

  1. A tax cut during inflation
  2. Extra burden because brackets are not adjusted for inflation
  3. A surcharge on capital income
  4. Progression in social contributions
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Correct: Extra burden because brackets are not adjusted for inflation

Unadjusted brackets raise the tax burden even when purchasing power is flat.

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