Trump’s payroll deferral tax will be ‘very helpful’ to small business: Andy Puzder
Former CKE Restaurants CEO Andy Puzder on the future of small business amid protests, the payroll deferral tax and the stimulus stalemate.
Federal workers will soon see their payroll taxes deferred pursuant to executive action taken by President Trump in August.
Continue Reading Below
A spokesperson for the Office of Management and Budget confirmed to FOX Business that it plans to implement the deferral as soon as possible.
“The president put forward this action to give relief to all Americans during this pandemic – as an employer, the Executive Branch is implementing the deferral to give our employees relief as quickly as possible, in line with the presidential memo – the president took action when Congress didn’t,” a spokeswoman for the Office of Management and Budget said in an emailed statement.
A senior administration official said the government has been working with payroll providers since guidance related to the action was released on Friday to address any issues in order to get the policy underway.
TREASURY RELEASES PAYROLL TAX DEFERRAL GUIDANCE
The Washington Post reported on Monday that there will be no choice for about 1.3 million federal workers to opt-out of the policy, citing an email obtained from the Labor Department.
Virginia Democrat Rep. Don Beyer said the move treats the federal workforce “as a guinea pig for a bad policy.”
“Their proposed payroll tax deferral would not really put money in workers’ pockets, it would simply set up the members of the federal workforce who can least afford it for a big tax bill that many will not expect,” Beyer said in a statement.
According to the IRS guidance, employers are able to defer payroll tax withholdings for employees with incomes below $4,000 during a bi-weekly pay period, calculated on a pre-tax basis, or the equivalent.
The deferral period will be Sept. 1 through Dec. 30, until a pay period begins on January 1.
TRUMP'S PAYROLL TAX DEFERRAL MAY LEAD TO SIGNIFICANT TAX BILLS FOR WORKERS, BUSINESS GROUPS WARN
The U.S. Chamber of Commerce cautioned that workers could owe amounts ranging from around $751 for someone earning $35,000 to nearly $1,610 for someone earning $75,000.
Trump, however, has said he will forgive those deferrals, rendering the measure a true payroll tax holiday – a policy that would require congressional action.
In the event that deferrals are not forgiven, interest and penalties would begin accruing on May 1.
It is unclear whether many companies will choose to adopt the policy for their own workforces.
Pete Isberg, vice president of government relations for payroll processing firm ADP, told FOX Business that this sort of process normally takes months.
“It’s unlikely that many employers will be able to make the programming changes by Sept. 1,” Isberg said. “We’ve advised Congress and Treasury that anything like this normally requires at least six months for an orderly programming transition.”
GET FOX BUSINESS ON THE GO BY CLICKING HERE
The payroll tax is paid separately from federal income taxes. It funds Social Security and Medicare. Employers and employees each pay 6.2 percent for Social Security and 1.45 percent for Medicare, and an additional 0.9 percent is levied on the highest earners.
The executive order applies only to the 6.2 percent Social Security obligation.
CLICK HERE TO READ MORE ON FOX BUSINESS
Source: Read Full Article