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Unions, businesses call Trump’s tax deferral plan unfair, unworkable

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.

Reader comments

Thu, Sep 17, 2020 Deborah a Crawley MO

I am a federal employee with 38 years of service and never have I witnesses such an act from our Federal Government. I cannot opt out of this rediculous plan to stop SSI taxes from my pay so therefore I must take steps to bank the extra money for the first four months of 2021. This makes absolutely no sense at all. I didnt ask for this temporary loan not do I want it but it is being shoved down my throat and dictated by the Presidents order. This is definitely no way to try and get re-elected

Wed, Sep 9, 2020

Luke - hate to say it bro, because I hate to criticize people mostly. But look at the story, and then look again at your comment. Do they match at all? You sound like a bonehead, man. I mean, you're saying that because the unions complain it means whatever they are complaining about must be ... good? No way man. Whoever complains about this idiotic idea of cutting a tax on your paycheck but then making you pay it back a few months later is right to complain. The only reason they're doing this is because it makes the president look good to a few boneheads for a few months. Since they get a little more money for now. But they have to pay it back very very soon. After the election. This is amazingly stupid.

Fri, Sep 4, 2020 Toni

Is there a way to opt out of this or pay it after the fact if we can not opt out?

Wed, Sep 2, 2020

Luke's a fool, living in a fool,s paradise. He can't see the forest for the trees.

Wed, Sep 2, 2020 Sergio CA

This is one hell of a ????? mess. No thought process in doing this action and will hurt millions of people. Not only federal workers but people who worked hard all their lives and now depend on Social Security retirement and health care. For the one that ranted on Unions, you are just an ingnorant fool. This has nothing to do with unions. The useless one here is you and probably all the other adjectives that you used in your comment.

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