Obama's Plan For Chained CPI Is Both A Stealth Tax On The Middle Class And A Cut For grandma

[HiPointDem]

Last week it was revealed that the President's budget proposal will include a revision to the way the government calculates the impact of the rate of inflation as a concession to House Republicans...There are several different ways that economists calculate the Consumer Price Index, according to the AARP Public Policy Institute.

CPI-W is the current cost of living adjustment index for Social Security. It reflects the spending habits of households where the income comes from a wage earner. CPI-U expands CPI-W to reflect the spending habits of the retired, professionals, the unemployed and self-employed as well as wage earners.

"Chained CPI" refers to another adjustment, particularly to CPI-U. As an example, CPI-U and CPI-W already incorporate people switching from Starbucks coffee to homemade when prices increase. Chained CPI-U takes that a step further — the idea that when coffee gets more expensive, people switch to orange juice. It incorporates more switching.

When it comes down to it, Chained CPI-U spits out a lower rate of inflation than regular CPI-U, which already spits out a lower rate of inflation than the current CPI-W...This means that over time, seniors receiving Social Security see their benefits cut...You'll see that the annual Social Security payment in 2012 under chained CPI would be the same as it was in real life in 2009.

Still, chained CPI could also hit the middle class. While Social Security is tied to CPI-W currently, the cost of living adjustment to tax brackets is indexed to CPI-U. As a result, incomes would jump to higher tax brackets faster, CEPR reported, and the effective income tax rates would increase. According to Congress’ Joint Committee on Taxation, if individual income taxes were indexed to the Chained CPI starting in January 2013, by 2021, 69 percent of the gains in revenue would come from taxpayers with incomes below $100,000, while those in the highest income brackets would barely be affected.

http://finance.yahoo.com/news/obamas-plan-chained-cpi-both-160502598.html

[bowens43]

1. Of course, Obama is onthe side of the 1%....we know that

[tridim]

3. Obviously. That must be why he just raised their taxes.

Thanks for the laugh emoprog. Keep it up!

[indepat]

2. Sounds like a very matter-of-fact far right-wing plan to make the Federal income tax scheme more

regressive. Please, some one, show me how BHO is not a goodly bit of right-of-center in governance relating to fiscal issues, among a host of others.

[The Link]

4. He is a DINO.

Thank goodness good Democrats in Congress will put the brakes on his sorry ass.

[dogknob]

5. Dems and Reps are NOT the same!

Republicans want government for the white, wealthy, christian and male.

Democrats want government for the wealthy, regardless of race, religion or gender.

[enough]

6. Very important point, thanks. (nt)