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Dylan Matthews – Everything you need to know about Chained CPI in one post

09 Apr

They’re going to get it one way or the other. Most likely the other. Tearing down Social Security is the right wing’s holy grail.

I guess they consider it some of that “free stuff” that the moochers love, (all 47% of ’em), that makes them a blight on society.

I would be willing to bet that ALL of these guys have someone in their family, (likely several someones), that benefit from this moocher system.  Dontcha think??

Now, the democrats are going to do this in the name of compromise. Republicans will make sure that people think the dems own that decision completely, I would imagine. I don’t know why Obama would think this is a good move. Maybe I’m missing something.

From Dylan Matthews at the  wonkblog.  A piece of the piece.

Everything you need to know about Chained CPI in one post

Dylan Matthews

Here is a sentence you won’t hear politicians or policy wonks saying in the next few weeks: “We should pay Social Security beneficiaries less in the future and push a lot of people into higher tax brackets.” Here is a sentence you almost certainly will hear: “Let’s adopt chained CPI.”   ——

The results by using chained CPI for taxes are also striking. The Tax Policy Center calculated the income tax increases that would be caused by a switch to chained CPI. They’re not big — a little more than $100 a year for most families — but they’re oddly regressive:

The group getting the biggest tax hike is families making between $30,000 and $40,000 a year. Their increase is almost six times that faced by millionaires. That’s because millionaires are already in the top bracket, so they’re not being pushed into higher marginal rates because of changing bracket thresholds. While a different inflation measure might mean that the cutoff between the 15 percent and 25 percent goes from $35,000 to $30,000, the threshold for the top 35 percent bracket is already low enough that all millionaires are paying it. Some of their income is taxed at higher rates because of lower thresholds down the line, but as a percentage of income that doesn’t amount to a whole lot.

All told, chained CPI raises average taxes by about 0.19 percent of income. So, taken all together, it’s basically a big (5 percent over 12 years; more, if you take a longer view) across-the-board cut in Social Security benefits paired with a 0.19 percent income surtax. You don’t hear a lot of politicians calling for the drastic slashing of Social Security benefits and an across-the-board tax increase that disproportionately hits low earners. But that’s what they’re sneakily doing when they talk about chained CPI.

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Posted by on April 9, 2013 in Economy, Education, Environment, Health, Politics

 

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