19 Sep Trump’s payroll tax cut would ‚terminate‘ Social Security, critics say
Much of the news coverage of President Trump’s proposed 2020 budget, which was released Monday, focuses on two aspects. Hourly workers sent home without pay or laid off because of the economic slowdown would get nothing. That would include the workers most vulnerable to virus quarantines or workplace closures, namely service workers such as waiters and waitresses, hotel staff and office cleaners.
- „If I win, I may extend and terminate,“ Trump said of the payroll tax cut on Saturday.
- “We estimate that [Old Age and Survivors Insurance] OASI Trust Fund reserves would become permanently depleted by the middle of calendar year 2023, with no ability to pay OASI benefits thereafter,” he added.
- “The President has clearly stated repeatedly that he will always protect Social Security and Medicare, including from Democrats pushing plans to give benefits to illegal aliens,” he added.
- Their argument is that by reducing the cost of employing someone, and increasing the amount of money workers take home, the cut will make both hiring and job-seeking more attractive.
- The moral of the story then was that sending people larger checks all at once works better than parceling money out a paycheck at a time.
- “In other words, I’ll extend beyond the end of the year and terminate the tax,” he added, though he did not specify whether he would seek to pay out benefits using general tax funds or other revenue sources.
„If a follow-on proposal comes, that could be something that would have more significant impact.“ „If he throws it until the end of 2023, then benefits will stop, because there’s not enough money in the accumulated reserve,“ Altman said. But that estimate was put out in April and did not take into account the effects of the pandemic. Other more recent estimates have predicted the funds now will likely run out sooner under current conditions, in 2032 or 2028. The White House is considering federal assistance for the shale oil industry, which has been hit hard by the oil price collapse this week, a White House official said. But the official cautioned that the situation is still fluid and that any aid would not be on the level of an industry bailout.
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If Trump were successful in making the payroll tax cuts permanent, he would hope to fund Social Security and Medicare from general revenue, a Republican source says. Payroll taxes are taken from https://bookkeeping-reviews.com/trump-proposes-eliminating-payroll-tax-through-the/ both employers and workers to help fund government programs such as Social Security and Medicare. Currently, employers and workers each pay 6.2% towards Social Security, or 12.4% total.
For most people, the new coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia. Trump makes no apology for unilaterally banning travel from Europe in face of coronavirus pandemic; chief White House correspondent John Roberts reports. The Trump campaign pointed to Trump’s past promises to protect Social Security, saying he would not allow benefit cuts to move forward. “We estimate that [Old Age and Survivors Insurance] OASI Trust Fund reserves would become permanently depleted by the middle of calendar year 2023, with no ability to pay OASI benefits thereafter,” he added.
What Exactly Is the President Proposing?
Trump’s payroll tax cut, if made permanent, would make that happen even quicker, as soon as 2023, said Nancy Altman, president of Social Security Works, an advocacy organization. Trump announced on Saturday that he plans to put a temporary payroll tax holiday in place for workers who make less than $100,000 per year. The tax suspension would likely run from as soon as August through the end of the year, he said. Bowing to political reality, the Treasury secretary, Steven Mnuchin, said Thursday that the first draft of the next rescue package in the Senate would not include a payroll tax cut.
Personal income taxes are not affected by eliminating the employee side of the payroll taxes because income used to calculate personal income taxes is not adjusted to take payroll taxes into account. In President Donald Trump’s address to the nation on March 11, 2020, he called on Congress to provide „immediate payroll tax relief“ in response to the negative economic effects of the coronavirus (COVID-19) outbreak. Although details are scarce on the proposal, many predict that the president is going to propose a reduction of the employees‘ portion of the FICA tax until the end of the year.
What Trump’s Payroll Tax Cut Will Mean for You
These amounts are required to be withheld by employers, while self-employed individuals must pay them directly to the U.S. Smaller sums tucked into weekly paychecks in the form of a payroll tax cut were spent at about perhaps half that rate, according to research by the New York Fed, with the rest saved or applied to debt. Trump’s proposal, to eliminate both the workers’ and employers’ payments, is of a different scale. Unless it is also somehow replaced, it could exacerbate funding shortfalls that the two popular programs already face in coming years, as the U.S. population ages and demand for healthcare increases.
For illustrative purposes, we assume the proposal would go into effect on April 1. In other words, payroll taxes would be eliminated for three-fourths of the year. WASHINGTON — President Donald Trump told lawmakers he wants a payroll tax cut that would last at least through the election to give consumer spending a jolt as the coronavirus threatens https://bookkeeping-reviews.com/ to cripple economic growth. In 2011, the payroll tax cut was seen by Obama and his aides as an unpalatable choice forced on them by intransigent Republicans in Congress. Obama sought to extend the Making Work Pay tax credit that had been implemented in 2009 and 2010, which provided a maximum of $400 for single persons and $800 for families.
Trump doubles down on call for payroll tax cut through end of 2020
Mr. Laffer’s acolytes, including conservative activists Stephen Moore and Steve Forbes, have also pushed Mr. Trump to cut payroll taxes. Their argument is that by reducing the cost of employing someone, and increasing the amount of money workers take home, the cut will make both hiring and job-seeking more attractive. How a temporary reduction in payroll taxes became the president’s go-to proposal to stoke the economy. Reducing the payroll tax to zero, as Trump reportedly proposed, would have an especially destructive effect on Social Security by placing its funding entirely in the hands of Congress.
- The analysis from the Social Security Administration’s chief actuary was based on the assumption no federal money would be diverted to ensure the program’s financial stability.
- Trump has proposed implementing payroll tax deferrals from Sept.1 through Dec. 31 for employees whose bi-weekly wages are less than $4,000, on a pre-tax basis.
- For illustrative purposes, we assume the proposal would go into effect on April 1.
- (That’s based on 40 hours per week at $50 per hour.) The $4,000 cap also means that the $137,700 wage base limit for Social Security taxes doesn’t come into play.