The Chained CPI Is Not JUST A Cut, It's Also A Regressive Tax Increase !!!

[WillyT]

<snip>

Yes, switching to chained CPI changes not only the cost of living adjustment for Social Security and other benefit programs that use a COLA, like federal pensions and veteran’s benefits. It also changes the cost of living adjustment for…. tax brackets. A tax bracket that might go up, say, $100 year-over-year would only go up $50, under chained CPI. And that means that higher tax brackets would be available at lower yearly income. This sounds technical, but the point is it’s a tax increase, designed to bring in $60 billion over ten years. What’s more, it’s a regressive tax increase.

Low-wage workers would eventually see the biggest increases, while high-income taxpayers would see only small changes. That’s because the wealthiest taxpayers already pay taxes at the highest marginal rate, currently 35 percent.

For example, by 2021, taxpayers making between $10,000 and $20,000 would see a 14.5 percent increase in their income taxes with a Chained CPI, according to an analysis by the Joint Committee on Taxation. Taxpayers making more than $500,000 would get a tax increase of 0.3 percent, while those making more than $1 million would get a tax increase of 0.1 percent.

2/3 of the tax increases under this change would be paid by people making under $100,000 a year.

<snip>

More: http://news.firedoglake.com/2011/07/08/chained-cpi-not-only-a-social-security-benefit-cut-but-a-regressive-tax-increase/

:wtf:

:kick:

[emulatorloo]

1. Pelosi says this is not going to happen.

Worth calling congresspeople anyway.

But I think Pelosi is probably more likely to know what's going on than the blogger.


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http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201107081505dowjonesdjonline000464&title=pelosi-reassures-house-democrats-inflation-measure-switch-not-likely


Pelosi Reassures House Democrats Inflation Measure Switch Not Likely



By Kristina Peterson and Corey Boles, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- Minority Leader Nancy Pelosi (D., Calif.) reassured angry House Democrats that a proposal to change a key measure of inflation linked to Social Security was not likely to be part of a debt ceiling deal, lawmakers said Friday.

Pelosi calmed Democrats upset over a proposal to change how the Consumer Price Index is calculated that would curb Social Security benefits, dimming the prospects of an idea once floated as an area of bipartisan support.

"She basically reassured the group that there's no way it's going to happen," said Rep. Barney Frank (D., Mass.), following a Friday afternoon meeting of House Democrats in the basement of the Capitol building. "After this, I do not think reducing the CPI in any way is a viable option."

[WillyT]

2. Yep... Let's Make Sure It Does NOT Happen...

:hi:

[emulatorloo]

3. I've called my Dem Senator and Rep, am going to keep reminding them

[bvar22]

13. Pelosi also said that the final Health Care Bill...

...would have a Public Option.

[dixiegrrrrl]

14. Good reminder.

[TheKentuckian]

18. There is plenty of daylight between not going to happen and "unlikely to happen".

I'm not comfortable conflating the two phrases.

[woo me with science]

22. No, actually she has refused to rule it out: See here:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=1444858&mesg_id=1445352

[leveymg]

4. The Chained-CPI assumes the availability of cheaper substitutes for all goods in all areas, and

bases its calculation of price inflation on the cheapest substitute that is available anywhere.

Chained-CPI -- Chained Consumer Price Index for All Urban Consumers (C-CPI-U) -- is like double-plus-good CPI that assumes that all consumers in all markets can substitute the cheapest possible goods in all categories. This assumes a lot, such as the availability of cheaper substitutes. Not very realistic.

The present CPI measures the prices for each of the 8,018 item-area combinations (211 item categories X 38 geographic areas) are averaged together to form 8,018 basic indexes.

[WillyT]

6. My Favorite Quote On This So Far...

A Chained CPI assumes that as prices increase, consumers buy lower cost alternatives, reducing the amount of inflation they experience. For example, if the price of beef increases while the price of pork does not, people will buy more pork. Or, as opponents mockingly argue, if the price of home heating oil goes up, people will turn down their heat and wear more sweaters.

Link: http://www.google.com/hostednews/ap/article/ALeqM5j7oZuOr-LwC83YRBMUzm_6vgYXYw?docId=fd1817c3ab1348c69cdc928d8e98f805

:shrug:

:hi:

[Fuddnik]

8. That comes from the Hedonic Index instituted during Clinton's rule.

They assume that if you eat Sirloin Steak once a week and it jumps from $5 a pound to $6 a pound, you'll substitute for flank steak, which used to be $4 a pound, but is now $5 a pound. Voila!!! No inflation! Nobody makes the assumption that you'll substitute for Filet Mignon.

Even though your standard of living has taken a hit, everything is still the same.

[leveymg]

10. Nobody seriously claims the economics is actually a science. Choose the math that fits the policy

outcome desired. Whatever absurdity the market will bear. Chained-CPI is a prime example.

[mzmolly]

5. Has the President said he supports a chained CPI?

Anyone?

[Fuddnik]

9. No, it would be political suicide.

Instead, he'll use weasel words, like strengthen. Or reform. Or protect. It's political double-speak, so that people can say, "He never said he supported that".

But a lot of his admin, and Third Way guerrillas are out there pushing this under the radar. And he doesn't have to say it.

[mzmolly]

12. I see. So not saying something means he'll do it

and we need to be aware of that. Gotcha.

[Fuddnik]

16. No, that's how you WANT to see it.

Politicians are experts at double speak. The only thing he's ever said is he won't privatize SS, when asked about cuts. And that's the same runaround a lot of people use when asked about cuts.

I've listened to political double-talk for almost 50 years. It's not limited to one party. And I've written speeches for politicians. I know the techniques.

Not saying it doesn't mean he'll do it, as you absurdly infer. Based on his past speeches, and actions, I'd say it's a done deal.

[emulatorloo]

21. Which of his past speeches indicate this is a "done deal"?

[mzmolly]

24. As a former speech writer, I don't suppose you know that politicians are

political at times?

[notadmblnd]

7. Oh, so that's why Orrin Hatch said that poor people need to pay more taxes

http://tpmdc.talkingpointsmemo.com/2011/07/dems-go-after-hatch-for-saying-poor-need-to-do-more-to-shrink-the-debt.php

[leveymg]

11. What Orin Hatch means is that poor people should substitute food - if they can't afford

beef or pork anymore because the CPI is miscalculated over time under Chained-CPI, they should immediately eat each other. Donner Party - table for 12!

[WillyT]

15. Or...

:D

:hi:

[fascisthunter]

17. nice....

:sarcasm:

[Faryn Balyncd]

19. It steals from the working and middle class, and enables historically low tax rates for billionaires

[WillyT]

20. Yeah... Huh ???

:shrug:

:hi:

[woo me with science]

23. K&R nt

[WillyT]

25. Kick !!!

:kick: