A coalition of 30 business groups on Tuesday sent a letter to Congress and the White House criticizing President Trump’s move to defer payroll taxes through the end of the year. The letter called Trump’s executive order on the issue “unworkable” and claimed it would impose a serious hardship on employees.
“Under current law, the EO creates a substantial tax liability for employees at the end of the deferral period,” the letter states.
“Without Congressional action to forgive this liability, it threatens to impose serious hardships on employees who will face a large tax bill as a result of deferral.”
Trump issued the order earlier this month, following stalled negotiations on a COVID-19 relief package with congress. Ordinarily, many employees pay a 6.2% tax out of their paychecks each month, with the money being used to fund Social Security. Trump’s order would defer those payments through the end of the year, but workers would be expected to pay what they owe next year. Trump believes he could then pressure Congress into passing legislation that would forgive workers of the amount in payroll taxes they owe.
The letter suggested that many businesses would not implement the payroll tax deferral at all.
“Many of our members will likely decline to implement deferral, choosing instead to continue to withhold and remit to the government the payroll taxes required by law,” the letter said.
Democrats have attacked Trump’s order as a plan to defund Social Security. Trump has suggested that if he wins another term, he would move to erase payroll taxes entirely.
“He is laying out his roadmap to cutting Social Security,” presumptive Democratic nominee Joe Biden recently said of Trump’s executive order. “Our seniors and millions of Americans with disabilities are under enough stress without Trump putting their hard-earned Social Security benefits in doubt.”
Conservative economists close to the Trump administration have touted a payroll tax cut as a boost to the economy. Stephen Moore, a member of Trump’s economic recovery task force, had previously urged Trump in a Wall Street Journal op-ed to circumvent Congress and defer payroll taxes amid the pandemic.