Unions, businesses call Trump’s tax deferral plan unfair, unworkable
- By FederalSoup Staff
- Sep 01, 2020
President Donald Trump’s executive order deferring tax withholdings will go into effect with federal employees’ second September paycheck, a senior administration official confirmed to the Washington Post.
The order -- which delays payment of the 6.2% of workers’ pay that normally goes to fund Old Age, Survivors and Disability Insurance – also requires the deferred taxes to be repaid starting in January.
Most businesses have declined to implement the proposal. “Many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year. It would also be unworkable to implement a system where employees make this decision,” the U.S. Chamber of Commerce said in a letter to Department of Treasury Secretary Steven Mnuchin and congressional leaders.
Businesses also cited a lack of guidance that has made implementation difficult, with the Post reporting that the Treasury Department and the IRS “issued only early guardrails describing the program on Friday, four days before Trump’s directive is set to take effect.”
Unions and lawmakers representing federal employees were vocal in their condemnation of the plan.
“President Trump’s payroll tax scheme is a scam that leaves workers with a substantial tax bill right after the holiday season,” American Federation of Government Employees National President Everett Kelley said in a statement. “Workers will have to pay double their regular payroll tax rate during the first four months of 2021 and if they cannot do so, they will have to pay interest and penalties on amounts still owed if they’re not paid back by May 1, 2021.”
Kelley called the plan a move to undermine the Social Security system and urged lawmakers and the president to collaborate on another round of pandemic relief legislation.
Tony Reardon, president of the National Treasury Employees Union, told the Post that the deferral also creates “particular challenges for IRS workers for whom ‘overdue tax debt can have severe job consequences.’”
“The Trump Administration’s plan to initiate payroll tax deferrals for civil servants treats the federal workforce as a guinea pig for a bad policy that businesses already rejected as ‘unworkable,’” Rep. Don Byer (D-Alexandria.) said in a statement. Byer, who represents nearly 87,000 federal employees said the deferral “will do more harm than good,” setting up workers for an extra tax bill next year and threatening the Social Security trust fund.