<P> When cost - of - living adjustments, negotiated wage settlements and budgetary increases exceed CPI, media reports frequently compare the two without consideration of the pertinent tax code . However, CPI is based on the retail pricing of a basket of goods and services . Most purchases of that same basket require the use of after - tax dollars--dollars that were often subject to the highest marginal tax rate . Consequently, the COLA will necessarily have to exceed the CPI inflation rate to maintain purchasing power . </P> <P> The widely recognized problem known as bracket - creep can also occur in countries where the marginal tax brackets themselves are not indexed--COLA increases simply place more dollars into higher tax rate brackets . (Only under a flat tax system would a percentage gain on gross income translate into a comparable inflation - offsetting gain at the after - tax level .) </P> <P> Some salaries and pensions in the United States with a COLA (they vary by type) include: </P> <Ul> <Li> Social Security </Li> <Li> Civil Service Retirement System (CSRS) </Li> <Li> Federal Employees Retirement System (FERS) </Li> </Ul>

When was the last cost of living increase