Saturday, May 18, 2013

The Truth: Chained CPI Is Worse Than You Thought

 Many view the government switching to a chained-CPI to calculate price inflation as something that will impact Social Security recipient payments, but it is worse than that, it also straight out increases taxes. WaPo's Ezra Klein explains:

The proposal to change the measure of inflation used for federal programs to chained CPI, which rises more slowly than conventional inflation measures, is usually framed as a Social Security cut. And it is. The CBO estimates that it will save $133 billion in Social Security costs over 10 years. 
But it’s also a tax increase. Currently, the cutoffs for different tax brackets rise with CPI-U, a non-chained measure of inflation. Chained CPI would cause the cutoffs to rise more slowly, pushing more and more people into higher tax brackets. That raises $99 billion over 10 years. So about 43 percent of the deficit reduction from chained CPI comes from increased taxes, not spending reductions.

1 comment:

  1. Figures never lie, liars figure. Finding ways to hide taxes increases since- at least- 1913.