What is phantom tax?

Phantom tax is a term used to describe a tax that is not explicitly levied, but is instead imposed through inflation. When inflation occurs, the value of money decreases, which means that people can buy less with the same amount of money. This can lead to a decrease in spending, which can in turn lead to job losses and a decrease in economic growth.

Phantom tax is often seen as a regressive tax, meaning that it disproportionately affects low-income earners. This is because low-income earners are more likely to spend all of their income on essential goods and services, which are often the first to rise in price during inflation.

There are a number of ways to combat phantom tax. One is to increase the minimum wage so that low-income earners can keep up with inflation. Another is to provide tax breaks for low-income earners. Finally, the government can take steps to reduce inflation, such as increasing interest rates or reducing spending.