A raft of big-name business groups is warning many employers won’t participate in President Donald Trump’s payroll tax deferral plan.
Calling it “unworkable,” they said in a letter Tuesday to Treasury Secretary Steven Mnuchin that it risks saddling their workers with large postponed tax bills they could have trouble paying back.
Someone earning $35,000 would see their biweekly pay go up by $83 this year, the groups wrote, but would owe $751 next year. People earning $75,000 would see a $178-per-paycheck bump now, but would face a $1,609 tax bill next year.
The U.S. Chamber of Commerce, National Retail Federation and the National Association of Manufacturers, among more than two dozen others, urged policymakers to instead to return to negotiating over a stalled coronavirus relief package in Congress.
“Many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year,” they said. “It would also be unworkable to implement a system where employees make this decision.”
“Therefore, many of our members will likely decline to implement deferral.”
A White House spokesman defended the plan.
“President Trump used the authorities available to him to give employers the opportunity to put more money in the pockets of their employers,” Judd Deere said. “He encourages all employers to take advantage of this in order to support hardworking Americans during this period of economic uncertainty.”
The letter comes as the department races to fill in the details of Trump’s presidential memorandum, issued 10 days ago.
Frustrated with gridlock in Congress, and hoping to boost the economy before the November elections, the president postponed until next year the deadline for paying the workers’ half of the 12.4 percent Social Security tax. People earning less than $4,000 per biweekly pay period are eligible.
Trump doesn’t have the power to eliminate the levy — only Congress can do that — but he’s betting lawmakers will eventually step in and waive the tax bill.
Many businesses are apprehensive about the plan, in part because it comes with some financial risk to them. They could potentially be on the hook for paying back deferred taxes for workers who later quit, for example. It would also likely be difficult to administer.
Mnuchin has said the plan would be optional for businesses.
“We hope Congress and the administration come together on a path that supports workers instead of burdening hardworking Americans with a large tax bill next year,” the business groups wrote.
They included trade associations representing a swath of industries, including restaurants, drug stores, footwear companies, restaurants, contractors and winemakers.