House Democrats are showing little sign of fulfilling President Trump’s wish for Congress to step in and forgive the payroll taxes that would be deferred under his executive memo.
An August 21 letter signed by 142 House Democrats condemns Trump’s executive action and marks the latest in a long string of criticism of the efficacy and practicality of the White House’s unilateral response to providing coronavirus pandemic relief.
“We demand that you revoke this misguided, dangerous action, renounce your plan to eliminate the payroll tax,” and endorse the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 6800) instead, wrote the lawmakers, including House Ways and Means Committee member John B. Larson, D-Conn., the chair of the Social Security subcommittee.
Trump signed an executive memo August 8 after negotiations with Congress broke down directing the Treasury Department to implement a deferral of the employee share of payroll taxes from September 1 through December 31. The memo left the details of implementation almost entirely up to Treasury, which has yet to issue any guidance on the topic.
The Democratic lawmakers warned that the memo “lays the groundwork” for undermining funding for Social Security and does little to provide meaningful economic support to those who have been affected by the pandemic. They noted that unemployed individuals wouldn’t benefit, and that deferral merely postpones tax payment for those who are employed, making for a bigger tax bill next year.
The letter also cautioned that while the deferral is intended to provide workers with more money in their paychecks, it doesn’t change employers’ legal requirement to withhold the payroll taxes from those checks.
“In short, your ill-conceived action undermines Social Security, does not put money in the pockets of struggling, unemployed Americans, is not an effective stimulus measure, and creates unnecessary chaos among workers and employers,” the letter concludes.
Not Alone
The House Democrats’ letter is the latest in a chorus of criticism of the deferral proposal.
Earlier in the week, several Senate Democrats wrote a letter to the Social Security Administration requesting analysis of how quickly Social Security funds would evaporate if payroll tax rates were zeroed out. The request came after Trump made a series of remarks suggesting that he was interested in eliminating the payroll tax permanently, although his press secretary later clarified that he was just referring to employee payroll taxes that are deferred under the memo.
Nevertheless, House Democrats continued to voice concern over Trump’s initial statements in their letter, describing his words as a “callous attack on the cornerstone of Americans’ retirement security.”
Business groups have also been critical of the proposal. Treasury Secretary Steven Mnuchin indicated earlier this month that deferral would be optional, and a coalition of business groups responded by warning that the deferral would be overly complicated and businesses will likely ignore the memo and continue to withhold and remit taxes.
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