Trump’s payroll tax deferral could cost workers more in 2021, business leaders warn


Business leaders are pouring cold water on President Donald Trump’s push to defer payroll taxes, saying that workers could wind up owing a lot to Uncle Sam in 2021 under his plan.

“Many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year,” the US Chamber of Commerce and more than 30 trade associations wrote in a letter to Congress and the Treasury Department.

“It would also be unworkable to implement a system where employees make this decision,” wrote the groups, adding many of their members will likely decline to defer the tax.

Long enamored with a payroll tax cut, Trump signed an executive action earlier this month that called for deferring the levy that funds Social Security until the end of the year and exploring forgiving it completely. It would apply to the employee portion — 6.2% — of the tax for workers making up to roughly $104,000 a year.

However, only Congress has the power to actually reduce taxes, so the President can only push back their due date.

The move was one of four relief measures Trump signed that day and came right after lawmakers left town after being unable to agree on another legislative relief package. But the President’s efforts on extending the federal enhancement to unemployment benefits and the eviction protections, as well as the payroll tax deferral, generated much criticism and skepticism as to their effectiveness.

The letter, sent Tuesday, was signed by a wide range of industry groups including manufacturers, restaurants, retailers and building contractors. They called on Congress to provide tax relief without the uncertainty of Trump’s action. Lawmakers are generally not in favor of including a payroll tax cut in a new package.

It noted that workers making $50,000 a year could owe nearly $1,100 in payroll taxes in 2021, while those earning $104,000 could be hit with a tax bill of more than $2,200.

The White House said that the President’s measure will help Americans during the pandemic.

“By enacting the payroll tax deferral, President Trump used the authorities available to him to give employers the opportunity to put more money in the pockets of their employees, and he encourages all employers to take advantage of this in order to support hardworking Americans during this period of economic uncertainty as we finish the fight against Covid-19,” said Judd Deere, a White House spokesman.

Trump’s effort is not the first payroll tax deferral this year. As part of the $2 trillion coronavirus relief package Congress approved in late March, employers are allowed to delay paying their 6.2% share of the Social Security payroll tax through year’s end.

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