Chained CPI will hurt Seniors, Vets, retired women, and working class families will see an income tax increase.
Yup, Chained CPI used to adjust income tax brackets will slow that adjustment to less than wage growth. Bracket creep will impact earners of 25k or less: massively. Earners of 100k and more might not even notice the .1% creep.
Most understand that the Chained CPI will hurt seniors, especially woman who earned less during their working days and live a little longer than their spouses while facing their last years living alone.
But what may not be well known is that Chained CPI would be used not just for calculating Social Security and Veterans Benefits..... If the Government adopts Chained CPI for adjusting Income Tax Brackets, & wages grow more than the Chained CPI, your income rises faster than the Income tax brackets would. Over time many families would be bumped into the next income tax bracket. Currently the Income Tax Brackets are adjusted to CPI-U.
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. For example, workers with incomes between $10,000 and $20,000 would experience an increased tax burden of 14.5 percent, while those with incomes over $1,000,000 would just see an increase of 0.1 percent.Seniors dont have the same buying patterns as working wage earners and clerical workers, which is what CPI-W is tracking. CPI-W can't possibly represent Seniors buying habits.
Seniors spend more on housing and medical care than people still in the workforce who maybe decades younger and in the prime of their health. Substituting Medical care may be impossible in some situations, and I can't imagine how one can substitute a Nursing Home. 2 out of 5 seniors rely on Social Security as 90% of their retirement income, while in 2012 the average Social Security benefit for those 65 and older was less than $15,000.
Sign this White House petition and tell President Obama no cuts to Social Security benefits will be tolerated.
Cutting Social Security benefits via Chained CPI or Superlative CPI is unacceptable to Americans. A recent National Academy of Social Insurance poll found 64% of Americans thought the COLA should be increased not cut. A poll conducted by the Harvard School of Public Health showed 66% of Americans supported no cuts to Social Security.
Increasing annual COLA's also increases Social Security Trust Fund revenues. This improves Social Security's long term solvency while increasing benefits for Seniors.
Tell President Obama:
Brought to you by the Social Security Defenders of Daily Kos.
In addition, there are fewer opportunities for substitution in these areas of consumption. Also, because the elderly are a less mobile population, they may find it more difficult to change their consumption patterns. If accuracy is the main concern to be addressed by altering the Social Security cost of living adjustment, then the BLS could construct a full elderly index that more accurately tracks the consumption patterns of the elderly. There is no basis for assuming that a Chained CPI more accurately measures the rate of inflation experienced by the elderly than the current measure,however there is no doubt that it will lead to a reduction in benefits.BTW, The Center For Economic And Policy Research was founded by Economist Dean Baker, who joined the Social Security Defenders blogathon last Friday.
The best thing for Social Security is a growing economy, creating jobs and raising the minimum wage regularly can go a long way to seeing Social Security thru to 2045 when 50% of Boomers born in 1964 will be dead. Once The Social Security Trust Fund gets past this point, assets will grow slowly and by 2062 assets will grow quickly.
As you can see once the Boomers are dead, the number of workers supporting a retiree will vastly improve.
9:19 AM PT: Petition had 1,140 signatures before this dairy went, lets see what today brings......
10:13 AM PT: 39 sigs so far.... Meh.