Chained CPI means higher income taxes for middle class
Is anyone still keeping track of broken Obama promises? If they are, they might want to include his vow only to raise taxes on the "rich" and not the "middle class."
The White House has confirmed that President Obama's forthcoming budget contains an income tax increase on middle class Americans.
During a Friday, April 5 White House press briefing, spokesman Jay Carney replied "I'm not disputing that" when asked if a particular Obama budget proposal would raise income taxes on the middle class.
The proposal in question is known as "Chained CPI." The term is a Beltway euphemism for measuring inflation at a different, slower pace. Many tax and budget items are indexed to inflation, so slowing inflation's measured rate of growth has both spending cut and tax increase implications.
On the tax side, all income tax brackets are subject to inflation. Slowing down the inflation rate slows down the annual rate of growth in all income tax brackets.
This means the Obama budget contains a tax increase on 100 percent of middle class taxpayers--anyone who pays the federal income tax.
Many other tax provisions--the standard deduction, the personal exemption, PEP and Pease, IRA and 401(k) contribution limits, and many others--are also tied to how CPI is measured.
Chained CPI as a stand-alone measure (that is, not paired with tax relief of equal or greater size) is a tax increase and a Taxpayer Protection Pledge violation. Various reports peg the tax increase amount as exceeding $100 billion over the next decade.
The Senate is not likely to approve a chained CPI this year. But if the GOP takes control in 2014, it will almost certainly be part of any entitlement reform for Social Security.
This little exchange between press secretary Carney and Major Garret is interesting:
GARRETT: And to critics who would say to this President, looking at this proposal, this is the last and possibly worst time -- from their point of view -- to raise taxes on the middle class, inflict benefit cuts on elderly on fixed incomes, even in the pursuit of deficit reduction, the President would say what?
CARNEY: The President would say that as part of a balanced approach that asks the wealthy and well-to-do and well-connected to contribute their fair share through tax reform, elimination of special tax breaks that average folks don't get, that we can also include entitlement reforms that allow us to achieve deficit reduction in a balanced way and allow us to continue to invest in our economy in ways that will help it grow and create jobs.
Obama has gone from "spread the wealth" to "spread the pain." I wonder if that will be as popular with his supporters?