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" Donald Trump announced that his administration is seeking to delay much of the payroll tax that funds Social Security—1 of 4 unilateral actions he took in lieu of negotiating with Congress on meaningful economic relief legislation. The president also said that if he is reelected, he wants not only to turn the delay into a tax cut that would result in significant revenue losses for Social Security, but also to eliminate employee payroll taxes for good. As our analysis based on the Social Security trustees’ projections shows, eliminating employee payroll taxes along the lines that the president has proposed would, absent additional action, completely exhaust the Social Security trust fund by 2026 or earlier and result in steep benefit cuts.
65 million
people receive Social Security.
Social Security is funded by a 6.2 percent payroll tax paid both by employees and employers; this payroll tax goes into the Social Security trust fund.* According to the trustees’ latest projections, the trust fund ensures that Social Security beneficiaries can count on all of their promised benefits until 2035, giving Congress enough time to address Social Security’s longer-term financial shortfall. Currently, 65 million people receive Social Security benefits, including retirees, people with disabilities, widows and widowers, and surviving spouses and children of workers. Most seniors and disabled worker beneficiaries rely on Social Security for a majority of their income. As the pandemic continues to exact a toll on Americans’ health and financial security, Social Security’s guaranteed income is all the more important.
Trump’s August 8 memorandum instructed the U.S. Department of the Treasury to delay the payment of employee-side Social Security taxes on wages paid from September 2020 through December 2020 to workers earning less than $4,000 every other week (roughly $100,000 on an annual basis). Because employers are legally required to withhold employees’ share of the tax notwithstanding Trump’s memorandum, many tax lawyers and payroll administrators have raised doubts about whether employees will see any boost in their paychecks from moving back the tax deadlines; employers may simply continue to withhold tax from paychecks and hold onto the money until the delayed deadline for paying it to the government. Regardless, the Committee for a Responsible Federal Budget has estimated that up to $100 billion in payroll tax revenue flowing into Social Security could at least be delayed under Trump’s action.
Trump has made clear that he wants the tax that is delayed this fall under his unilateral action to be permanently forgiven, which would result in a permanent revenue loss of about $100 billion for Social Security. At the Bedminster press conference, Trump also stated, “If I’m victorious on November 3rd, I plan to forgive these taxes and make permanent cuts to the payroll tax.” Trump doubled down on these comments on Monday, August 10, reiterating, “After the election, on the assumption that it will be victorious for an administration that’s done a great job, we will be ending that tax, we’ll be terminating that tax.”(source-American progress dot org.)
@howardfriedman7077
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