The phenomenon known as _____ occurs when inflation causes people to pay an increasing percentage of their income in taxes, even when their real incomes have not changed.

The phenomenon you're referring to is known as "Fiscal Drag" or "Bracket Creep". Here's how it works:

1. Fiscal drag occurs when individuals' income moves into higher tax brackets due to inflation, rather than an actual increase in real income.

2. As inflation increases, the nominal value of an individual's income also increases.

3. Even if their real income (the purchasing power of their income, adjusted for inflation) hasn't changed, they may find themselves in a higher tax bracket because tax brackets are typically based on nominal income levels.

4. This means they're paying a larger proportion of their income in taxes, even though their ability to purchase goods and services hasn't increased - this is the phenomenon known as fiscal drag.

5. Governments may choose to combat fiscal drag by indexing tax brackets to inflation, so that increases in nominal income due to inflation don't result in higher taxes.