Notice that Grover Norquist and his organization Americans for Tax Reform are opposed to the Chained CPI proposal because it would keep more people in higher marginal income tax brackets, resulting in a tax increase. The way they are looking at it is that Chained CPI will lower the government’s estimation of inflation, which won’t just result in lower cost of living adjustments for Social Security. It will also slow the rate at which marginal tax brackets are adjusted downwards. The result will be that people who would have had their tax bracket adjusted down will have to wait longer to see that happen. That means more revenue for the government, and the source of that revenue will come from the whole spectrum of taxpayers. Obviously, most of the money will come from people in the highest brackets, but that’s the nature of a progressive marginal tax system.
Their talking point is that this is a middle class tax hike, which would be true in the narrow sense that some small percentage of middle class folks would pay a higher marginal rate on a tiny percentage of their income.
Just something to think about as you weigh the pros and cons (both political and policy-wise) of the Chained CPI gambit.
Since it technically violates Obama’s often reiterated pledge not to raise taxes on the middle class, it’s quite obviously a another potential political headache. Is there some reason why you’re having trouble figuring out such obvious things?
There is no upside to Democrats proposing these kinds of things. In fact deficit reduction in general is a mug’s game for Democrats. As with Clinton’s surpluses, it merely gives Republicans more room for tax cutting when they’re next in power. By the same token, Grand Bargains are also always a mug’s game since they cannot bind the hands of future Congresses.
As I understand the vaporous WH description so far, this “new” CPI is “special” just for the old folks, veterans, the disabled, and anyone else who needs “entitlements” to survive.
Am I misunderstanding something?
I’s also love to hear why Obama thinks it’s a good thing to break the traditional contract that came with SS but would throw up his hands in horror at any talk of cutting the government bond rate retroactively.
Yikes. This is a bit of a mess. I don’t see anywhere in the transcript at that site an explicit statement that the chained CPI is also going to be applied to the tax code. And all along I’ve been presuming that it was only going to be applied to social security cost of living increases.
So are Grover and crew using a muddled exchange at the WH to mislead and juice up their “Obama increasing taxes on the middle class” angle? Or are they correct?
I think a better source is needed.
Another reason this is a big mess is that increasingly more and more social security income has become taxable. The AGI threshold beyond which SS income becomes taxable hasn’t changed since Ronnie signed it into law in 1983. It has never increased or been indexed to inflation. So while back then it might have affected 5-8% of the SS taxpayers. Now it effects 40-45%. So:
I think it is most likely that Chained CPI would be snuck in to impact tax brackets, too. While it would be regressive, it would also be fairly insignificant (100 bucks from most families), while allowing the GOP to vote for more revenues without admitting it.
I still think it is more likely that Grover is just playing with us.
Chained CPI in the tax code is going to hurt a lot of people if other major changes aren’t made that counteract the effects.
The source you cite gives $135 average increase for $30k-$40 income families just for one year. Over the period of 8-9 years (2013-2021) the overall increase in taxes is 29%.
But that also includes all families. For a household of two retirees facing the increasing taxation of their social security benefits, the effects will be more severe because their marginal rate is higher due to how the phase in of taxes on SS income occur.
http://www.kitces.com/blog/archives/510-The-Taxation-Of-Social-Security-Benefits-As-A-Marginal-Tax-R
ate-Increase.html
You lost me, Boo. In the post, you say the tax increase would fall heaviest on the top brackets, but in this comment, you call it regressive.
Which is it?
Both.
If you are in the top bracket, you’re not going to feel much of a pinch since the change will only effect the portions of your income covered by lower brackets, but you’ll still wind up paying the most money.
If you make like $30,000-$40,000, you’ll have the biggest hit as percentage of income.
So, it’s regressive but most of the money still comes from the rich.
I drilled down through some links and found this table as the basis for most of the numbers:
http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=3104&DocTypeID=1
Boo:
Have any rebuttal to this:
http://digbysblog.blogspot.com/2013/04/no-harm-no-foul-then-why-do-poor-people.html
?
Ah, so now High Priest Grover declares that chained CPI is actually a tax increase? And on the middle class to boot? Those aren’t permitted in the “conservative” religion, you know.
Anyway, a very convenient papal ruling for Repubs. Hope this was included on the Axelrod flowchart…otherwise someone needs to get busy!
The White House has given every indication of being blindsided by things that were totally predictable to everybody outside their bubble. They need to get out more.
Oh really? What are these “indications”?
There’s one right below, and it’s only one of many the past couple of days. They’ve made it clear they really expected a different reaction.
Giving a factual answer to a direct question is “pathetically whining”?
Thanks for clearing that up.
I think they’ll be getting out permanently in just a few years.
And now Carney is pathetically whining that the Republicans are cynically (they’re pols, what did you expect?) attacking them over a proposal that was only put in at the request of Republicans. Can’t anybody here play this game?
Here is the direct quote (link) (emphasis added)
Yeah, but Grover assumes the chained CPI will be applied to key tax code thresholds. I’ll wait for a more credible source before I believe it. The WH transcript Grover uses is muddled and I don’t know of any other source that says the budget includes that. Do you?
Seriously, I would like to know. I think it’s a higher probability that Grover is lying his ass off.
If you know how to use Google, you can quickly find out that yes, the propoasl does apply to taxes. Here, I’ll get you started.
I did attempt a google search and came up with a lot of noise. Thanks for the excellent link.
THIS REALLY SUCKS.
It’s not Chained-CPI. It’s Superlative-CPI.
Please use the White House approved terminology in the future.
Yes, because that’s important.
It’s still a shit sandwich, whether you call it Chained-CPI or Superlative. BTW, what makes it the highest quality or degree(that’s the Merriam-Webster definition)?
It’s not a shit sandwich. It’s a superlative shit sandwich.
Highest quality shit. So stop complaining.
Anybody know what in hell it’s supposed to chained to, or with? Other than Obama’s new BFF Paul Ryan?
Rather be on the side of Norquist opposing chained-CPI for different reasons than being on the side the Beltway and fucking Andrew Sullivan. He practically had an erection when he saw this budget. Not just for what it does, but because we hate it. Anything hippies hate is good.