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Why Trump isn’t getting the payroll-tax cut he wanted for the coronavirus

One thing President Trump has been consistent about in his coronavirus response is that he wants Congress to cut payroll taxes for all Americans and employers until the end of the year. He mentioned it in his national address Wednesday and tweeted about it Friday, and The Washington Post reports it was a reason a coronavirus aid package was held up in Congress for much of the week.

But the one thing both parties in Congress immediately agreed on is they don’t want to give it to him. Why? On the surface, it sounds nice: More money in Americans’ and employers’ pockets to help stem a nose-diving stock market and an economy that soon will feel the weight of cancellations everywhere, and is possibly already in a recession.

But Congress says it’s an expensive, unrealistic effort that could paper over the real economic struggles that the coronavirus brings to Americans. Here’s why Trump didn’t get his payroll-tax cut in this round of legislation and probably won’t:

Any tax break on paychecks would come out of the Social Security fund: That would risk seriously denting it or even depleting it, meaning people who depend on their Social Security check each month might not get it in a worst-case scenario. That’s the primary reason Republicans oppose a cut, said a senior Republican Senate aide.

It’s super expensive: Eliminating the payroll tax for both employees and employers would cost the government about $90 billion a month, aides in Congress estimated. Multiply that over the entire year and you’re looking at about $1 trillion in lost government revenue. The New York Times Jim Tankersley put that in perspective: That’s more than the 2008 Wall Street bailout or the 2009 stimulus bill to prop up the economy after the crash that ignited the Great Recession.

It would increase most paychecks by 7.65 percent, but that doesn’t help shift workers or those who rely on tips, said Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, on Wednesday. That’s because most of their money doesn’t come from paychecks.

It only helps people who are working now: So if you’re unemployed — or lost your job because of the coronavirus — this wouldn’t help you. And from Democrats’ perspective, it could distract from the real goal they want: mandatory paid sick leave.

“If a single mom gets a notice from school her child has to stay home, her getting a payroll-tax deduction or refund isn’t going to help her if she loses her job,” Sen. Kirsten Gillibrand (D-N.Y.) said Friday on MSNBC.

Here’s how Senate Minority Leader Charles E. Schumer (D-N.Y.) describes the idea of a payroll-tax cut: “We don’t think they should just throw money out of an airplane and hope some of it lands on the people who are affected.”

Republicans aren’t quite as vocal about their opposition to this, given their reluctance to upset Trump. But behind the scenes, this isn’t something that they’re seriously considering, no matter how much Trump tweets it or asks Congress for it in national addresses.

And it looks like in the next week, Republicans and Democrats could pass a coronavirus aid package that gives Americans everything from extended unemployment insurance to some paid sick leave to food aid — but not a break on their payroll taxes.



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