Businesses Skeptical Of Trump Payroll Tax Deferral
On August 8, President Donald Trump issued several executive orders to boost the economy. One of the executive orders directs Treasury Secretary Steve Mnuchin to “defer the withholding, deposit and payment” of the employee’s share of the federal payroll withholding tax from September 1, 2020 through December 21, 2020.
The order limits the deferral to individuals who earn less than $4,000 pre-tax in each biweekly pay period and while it merely defers the tax, and it also directs Treasury to “explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.”
As The Wall Street Journal explains, some companies have concerns about this policy. Specifically, businesses are worried about the administrative burden this order would place on them, that they could be liable for the taxes of employees who have changed jobs, and finally, that if Congress refuses to forgive the taxes, they will be on the hook for a larger tax bill in 2021. According to the U.S. Chamber of Commerce, until these questions are answered, businesses and employees face considerable uncertainty.
In an interview last week, Treasury Secretary Mnuchin did say companies would not have to participate in the plan to defer payroll taxes. Secretary Mnuchin said, “We can’t force people to participate, but I think many small businesses will and pass on the benefits.”