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Payroll Tax Cut Unlikely Despite President’s Backing

Posted on Mar. 4, 2020

President Trump urged the House to consider a payroll tax cut, but a top White House official denied that it is a priority for the administration.

Speaking to reporters after a House Ways and Means Committee hearing on March 3, Treasury Secretary Steven Mnuchin said the administration isn't “pushing for anything at the moment” when asked if the White House is considering a payroll tax cut package.

It isn't clear whether the president’s tweet calling for a one-year payroll tax cut was meant to spur the economy amid fears of an epidemic related to the COVID-19 virus, but Mnuchin said that such a cut isn't being considered. “It is not part of an emergency package,” he said.

Democrats also have reservations about a payroll tax cut. Ways and Means Chair Richard E. Neal, D-Mass., said his priority would be an infrastructure package to boost the economy. “I still believe the most important stimulus package is a good infrastructure initiative,” he told Tax Notes.

Temporary payroll tax cuts have been used in the past as stimulus by former Presidents Barack Obama and George W. Bush. Although Neal said he isn't opposed to cutting the payroll tax, he reiterated that an infrastructure package would provide a bigger boost to the economy.

A payroll tax cut would come at a considerable cost to the federal government. According to the Committee for a Responsible Budget, a temporary reduction would cost between $55 billion and $75 billion a year for each percentage point cut.

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