Final answer:
True, indexation involves IRS adjustments to tax components for inflation, ensuring tax brackets and rates correlate with inflation levels to void bracket creep.
Step-by-step explanation:
True, indexation does involve the Internal Revenue Service making annual adjustments to certain key tax components to account for inflation. In the context of government programs, many of them, including the U.S. income tax code, are indexed to inflation to prevent arbitrary redistributions and the negative effects of inflation on taxpayers. With indexation, the tax brackets and associated rates of taxation increase in accordance with inflation, which eliminates the problem of 'bracket creep' that was present before the late 1970s, where rising nominal wages due to inflation could push taxpayers into higher tax brackets without an actual increase in their real income. Tax brackets, Social Security payments, and other aspects of the tax code now rise automatically with inflation.