Chart 'o the day
by digby
Most of you know that the Chained-CPI is a cut in Social Security, disability and retirement benefits. But how about this?
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Yeah, it's a backdoor tax increase that falls disproportionately on those making between 20 and 50 thousand dollars a year:
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
Oh, and let's not forget. That tax hike, by law, goes to pay for George W. Bush's wars not to shore up Social Security. And since these benefits cuts only add a very small amount to the Social Security trust fund, we'll be back with another campaign to cut more within a couple of years:
President Obama says he wants to take this "off the table." Does that look like it will be off the table?
In fact, it does almost nothing top fix the problem it purports to fix while forcing Democrats to betray their principles.
If people care about the future of Social Security, benefits should be expanded, and the cap on earnings should be lifted so that the wealthy have to pay as much of a percentage of their wages as everyone else does. (In fact, I'd be willing to guess that even average people would be much happier to pay taxes for Social Security and medicare than Pentagon overruns.) Cutting benefits is just a nail in the coffin of our vital and necessary Social Security system. I'm sure the Pete Petersons of the world are very pleased.
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