US Codex
Bill
Notes

Title IV — Conversion to chained CPI

S. 11 · 113th Congress · Feb 26, 2013 · Lineage

IV Conversion to chained CPI

Sec. 4101 Conversion to Chained CPI

(a)
Consumer price index adjustments applicable to the Internal Revenue Code provisions—
(1)
In general— Paragraph (3) of section 1(f) of the Internal Revenue Code of 1986 is amended to read as follows:

“(3) Cost-of-living adjustment

“(A) In general—For purposes of paragraph (2), the cost-of-living adjustment for any calendar year is—

“(i) for adjustments first beginning before 2014, the product of—

“(I) the CPI fraction for calendar years before 2014, multiplied by

“(II) the Chained CPI fraction for calendar years after 2013,

“(ii) for adjustments first beginning after 2013, the Chained CPI fraction for years after 2013.

“(B) CPI fraction for calendar years before 2014—The CPI fraction for calendar years before 2014 is the fraction—

“(i) the numerator of which is the CPI for the calendar year 2012; and

“(ii) the denominator of which is the CPI for the calendar year 1992.

“(C) Chained cpi fraction for calendar years after 2013—The Chained CPI fraction for calendar years after 2013 is the fraction—

“(i) the numerator of which is the Chained CPI for the preceding calendar year, and

“(ii) the denominator of which is the Chained CPI for the calendar year 2012.”

(2)
Conforming amendments—
(A)
Paragraph (4) of section 1(f) of such Code is amended to read as follows:

“(4) Cpi and chained cpi for any calendar year—For purposes of paragraph (3)—

“(A) Cpi—The CPI for any calendar year is the average of the Consumer Price Index as of the close of the 12-month period ending on August 31 of such calendar year.

“(B) Chained cpi—The Chained CPI for any calendar year is the average of the Chained Consumer Price Index as of the close of the 12-month period ending on August 31 of such calendar year.”

(B)
Paragraph (5) of section 1(f) of such Code is amended to read as follows:

“(5) Consumer price index and chained consumer price index—For purposes of paragraph (4)—

“(A) Consumer price index—The term Consumer Price Index means the last Consumer Price Index for all urban consumers published by the Department of Labor. For purposes of the preceding sentence, the revision of the Consumer Price Index which is most consistent with the Consumer Price Index for calendar year 1986 shall be used.

“(B) Chained consumer price index—The term Chained Consumer Price Index means the most recent estimate of the Chained Consumer Price Index for all urban consumers published by the Department of Labor.”

(C)
Subclause (II) of section 36B(b)(3)(A)(ii) of such Code is amended by striking “consumer price index” and inserting “Chained Consumer Price Index (as defined in section 1(f)(5)(B))”.
(D)
Subclause (II) of section 36B(f)(2)(B)(ii) of such Code is amended by striking “by substituting “calendar year 2013” for “calendar year 1992” in subparagraph (B) thereof” and inserting “by substituting “calendar year 2013” for “calendar year 2012” in subparagraph (C) thereof”.
(E)
Clause (ii) of section 45R(d)(3)(B) of such Code is amended by striking “determined by substituting “calendar year 2012” for “calendar year 1992” in subparagraph (B) thereof”.
(F)
Subparagraph (B) of section 125(i)(2) of such Code is amended by striking “determined by substituting “calendar year 2012” for “calendar year 1992” in subparagraph (B) thereof”.
(G)
Subclause (II) of section 4980I(b)(3)(C)(v) of such Code is amended by striking “for “1992” in subparagraph (B) thereof” and inserting “for “2012” in subparagraph (C) thereof”.
(H)
Clause (ii) of section 5000A(c)(3)(D) of such Code is amended by striking “by substituting “calendar year 2015” for “calendar year 1992” in subparagraph (B) thereof” and inserting “by substituting “calendar year 2015” for “calendar year 2012” in subparagraph (C) thereof”.
(3)
Effective date— The amendments made by this subsection shall apply to taxable years beginning after December 31, 2013.
(b)
Modifications to cost-of-Living indexation of Social Security benefits—
(1)
In general— Section 215(i)(1)(D) of the Social Security Act (42 U.S.C. 415(i)(1)(D)) is amended to read as follows:

“(D) the term CPI increase percentage, with respect to a base quarter or cost-of-living computation quarter in any calendar year, means the percentage (rounded to the nearest one-tenth of 1 percent) by which the Chained Consumer Price Index for All Urban Consumers (as published in its initial form by the Bureau of Labor Statistics of the Department of Labor) for such base quarter or cost-of-living computation quarter exceeds such index for the later of—

“(i) the most recent calendar quarter (prior to such base quarter or cost-of-living computation quarter) which was a base quarter under subparagraph (A)(ii); or

“(ii) the most recent cost-of-living computation quarter under subparagraph (B);”

(2)
Definitions— Section 215(i)(1)(G) of such Act (42 U.S.C. 415(i)(1)(G)) is amended to read as follows:

“(G) the Chained Consumer Price Index for All Urban Consumers for a base quarter, a cost-of-living computation quarter, or any other calendar quarter shall be the arithmetical mean of such index (as published in its initial form by the Bureau of Labor Statistics of the Department of Labor as of the end of such quarter) for the 12-month period ending with such quarter.”

(3)
Conforming changes for pre-1977 law—
(A)
Section 215(i)(1) of such Act, as in effect in December 1978, and as applied in certain cases under the provisions of such Act as in effect after December 1978, is amended—
(i)
in subparagraph (B), by striking “and” after the semicolon;
(ii)
in subparagraph (C), by striking “for the 3 months in such quarter.” and inserting “for the 12 months in the 12-month period ending with such quarter; and”; and
(iii)
by adding at the end the following new subparagraph:

“(D) the term Consumer Price Index means the Chained Consumer Price Index for All Urban Consumers (C-CPI-U), as published in its initial form by the Bureau of Labor Statistics of the Department of Labor.”

(B)
Section 215(i)(4) of the Social Security Act (42 U.S.C. 415(i)(4)) is amended by inserting “ and by section 4101(b) of the Fiscal Sustainability Act of 2013” after “1986,”.
(4)
Effective date— The amendments made by this subsection shall apply with respect to increases described in section 215(i) of the Social Security Act, and to increases under programs dependent on Social Security cost-of-living adjustments, effective with the month of December for years after 2012.
(c)
Adjustments of provisions utilizing the consumer price index—
(1)
In general— Notwithstanding any other provision of law, and except as provided in this section, for purposes of determining the amount of any cost-of-living increase or similar adjustment under a Federal program or law effective in the month of December 2013 and thereafter, any such increase for the period for which the percentage change is determined shall be deemed to be, in lieu of the increase otherwise determined under applicable law, the increase determined under such applicable law by substituting the Chained CPI for the CPI.
(2)
Increases determined from a constant base year—
(A)
In general— In any case in which the amount of a cost-of-living increase effective in the month of December 2012 and thereafter is determined under applicable law by reference to a change in the CPI over a period which is determined by reference to a base period which remains constant from year to year, any such increase for any period shall be deemed to be, in lieu of the increase otherwise determined under applicable law, the increase, expressed as a percentage increase, equal to the product of—
(i)
the CPI fraction prior to 2014; multiplied by
(ii)
the Chained CPI fraction after 2013,
(B)
CPI fraction prior to 2014— The CPI fraction prior to 2014 is the fraction—
(i)
the numerator of which is the CPI for the period, ending with or during 2012, which corresponds to the base period; and
(ii)
the denominator of which is the CPI for the base period.
(C)
Chained CPI fraction after 2013— The Chained CPI fraction after 2013 is the fraction—
(i)
the numerator of which is the Chained CPI for the period, ending with or during the year preceding the year in which the determination takes effect, which corresponds to the base period; and
(ii)
the denominator of which is the most recently published estimate of the Chained CPI for the period, ending with or during 2012, which corresponds to the base period.
(3)
Special provisions and exceptions—
(A)
Programs tied to Social Security— Subject to subparagraph (B) and the effective date under subsection (b)(4), this section and the amendments made by this section shall apply to any cost-of-living increase or other adjustment which is determined by reference to an adjustment made under section 215(i) of the Social Security Act (42 U.S.C. 415(i)).
(B)
Poverty line— This subsection shall apply to revisions to the poverty line made pursuant to 42 U.S.C. 9902(2), and any programs for which adjustments or eligibility thresholds are based upon the poverty line as defined in that section.
(4)
Cpi and chained cpi— For purposes of this subsection—
(A)
the CPI for any period means the average monthly Consumer Price Index for such period, or a component thereof, as determined under the applicable law in connection with any cost-of-living increase or similar adjustment required for such period (without regard to this subsection); and
(B)
the Chained CPI for any period means, except as provided in paragraph (2)(C)(ii), the Chained Consumer Price Index for all urban consumers (as published in its initial form by the Bureau of Labor Statistics of the Department of Labor) for such period, or a component thereof, determined under applicable law in the same manner as the CPI for such period would be determined.
(d)
Change to 12-Month period for cost-of-Living indexation for Federal civil service and military retirement programs—
(1)
In general—
(A)
Federal civil service— Sections 8340(a)(2) and 8462(a)(2) of title 5, United States Code, are each amended by striking “3 months comprising such quarter” and inserting “12-month period ending with such quarter”.
(B)
Military— Section 1401a(h) of title 10, United States Code, is amended by striking “three months comprising that quarter” and inserting “12-month period ending with such quarter”.
(2)
Effective date— The amendments made by this subsection shall apply with respect to cost-of-living increases effective with the month of December of years after 2012.