New inflation gauge would cut benefits, hike taxes
Once the change is fully phased in, yearly Social Security benefits for a typical middle-income 65-year-old would be about $136 less, according to an analysis of Social Security data. At age 75, annual benefits under the new index would be $560 less. At 85, the cut would be $984 a year.
The chained CPI would cut Medicaid, the health insurance program for the poor, by $12 billion over the next decade. Medicare, the health insurance program for seniors, would see savings of almost $9 billion.
Taxes, however, would rise by about $65 billion over the same period.
The tax increases would hit low-income families the hardest, while high-income taxpayers would see smaller changes, according to a 2011 analysis by the nonpartisan Joint Committee on Taxation, the official scorekeeper for Congress.
For example, by 2021, taxpayers making between $10,000 and $20,000 would see a 14.5 percent increase in their federal taxes with a chained CPI, according to the analysis. Taxpayers making $200,000 to $500,000 a year would get a tax increase of 0.2 percent. People making more than $1 million would get a tax increase of 0.1 percent.
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