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.
