Kotlikoff, SS and CPI, a Question

Laurence J. Kotlikoff, the Boston University economist and recognized authority on generational accounting, has a plan (pdf file) to try to deal with future shortfalls in funding for Social Security and Medicare. This is a serious plan and worthy of study, but here I only want to question one of the assumptions.

Part of the plan involves a new Federal retail sales tax, declining from a starting point of 12%, intended to replace the payroll tax during phaseout.

From the text --

...the elderly poor who are living solely off of Social Security will be completely insulated from the effects of the retail sales tax. The reason is that when the tax raises consumer prices, the Social Security benefits of the poor and everyone else will be automatically adjusted for a simple reason: Social Security benefits are indexed to inflation by law....

The question comes in two parts --

First, is it true that current calculations of the consumer price index include and track taxes?

Secondly, is it reasonable to believe that a political system which has historically tortured logic to fight every tenth of a percent increase of CPI in order to hold down inflation adjustments of all kinds of payments is simply going to tack on a 12% increase coincident with the new tax?

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Most taxes are included in

Most taxes are included in the CPI, except for income and Social Security taxes:

http://www.bls.gov/cpi/cpifaq.htm#Question_10