Employers now able to defer workers’ payroll taxes until 2021

U.S. and World Business News

WASHINGTON (NewsNation Now) — Many employers and federal agencies are either opting out of President Trump’s payroll tax holiday, or cautioning their employees that the additional money in their paychecks might have to be paid back.

“They’re going to get the rude awakening that, oh my goodness I have to pay this back,” said Tony Reardon, president of the National Treasury Employees Union. His members are all federal employees, and Reardon said he’s urging all of them not to spend the extra money in their paychecks, as a result of President Trump’s payroll tax deferral.

“The real concern is that the government has not provided much of an explanation on what’s going on with this,” Reardon said.

The payroll tax deferral kicked in this week. The deferral was a part of President Trump’s executive orders to provide financial relief during the pandemic. The president issued a number of executive orders after Congressional Democrats and White House officials failed to come to terms on a stimulus package.

The payroll tax holiday allows employers to defer workers’ payroll taxes only until 2021.  

Rep. Don Beyer, a Democrat from Virginia, said many employers are choosing not to participate out of concern their workers will have to repay the tax benefit. Beyer said federal workers earning less than $100,000 per year, however, do not have the option to opt out of the payroll tax deferral.

“They’re just being forced to take this small increase in their paycheck knowing they’re going to have to pay it back,” said Beyer. He said only Congress can make the deferral permanent, which would save workers from having to pay back their tax benefit. Beyer said that’s unlikely, however, given the payroll tax is what funds Social Security.

“Some of my Republican friends say if Trump’s elected and they maintain control, they can forgive it. But the Social Security administrators say we will then run out of Social Security much faster, they’ll be forced to cut benefits next year,” said Beyer.

“We have no intention of having this cost one penny out of the Social Security trust fund,” said Treasury Secretary Steven Mnuchin. He said the administration will replenish the payroll tax pot by working with Congress to move money from the treasury’s general fund.

In that scenario, he said American workers would no longer have to pay the government back.

“And if we pass legislation that this will come out of the general fund, it’d make Social Security 100% whole,” said Mnuchin. “This is money in people’s pockets that they need right now that is very important and very meaningful.”

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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