Setting the Record Straight: The Chained CPI and Tax Reform
The recently approved tax reform bill, H.R. 1, indexes the newly formed tax brackets using the Chained CPI. This is causing some understandable confusion for NARFE members. However, the tax bill does not change the current index (CPI-W) used to determine annual cost-of-living adjustments (COLAs).
NARFE strongly opposes using the Chained CPI for determining COLAs to federal and military retirement annuities and Social Security because it would decrease benefits and undermine the true costs facing senior citizens.
The tax bill ties the tax brackets to the Chained CPI. Using the lower rate of inflation to calculate future tax rates means that taxpayers will more quickly fall into higher tax brackets. However, this does not impact the COLA experienced by seniors. NARFE will continue to oppose any effort to index cost-of-living adjustments to the Chained CPI.
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