Aug. 19, 2020
President Donald Trump’s recent executive action creating a payroll tax holiday for the remainder of the year could boomerang as a higher tax bill for American workers in 2021, the nation’s business leaders warned this week in a letter to Congress and the Treasury Department.
The letter was sent Tuesday by the U.S. Chamber of Commerce and signed by more than 30 trade groups, including manufacturers, restaurants, retailers and building contractors.
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The letter addressed the uncertainty of how Trump planned to compensate
for the upcoming shortfall so that workers are not on the hook to pay
the money back in the future, CNN reported.
As it stands the president’s plan does not forgive the 6.2% in payroll tax deferment, which is meant for workers who earn less than $104,000 annually.
The letter noted that workers making $50,000 a year could wind up owing nearly $1,100 in payroll taxes in 2021, while those earning the max of $104,000 could be hit with a tax bill of more than $2,200, CNN reports.
“Many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year,” the letter states.
Trump promised last week to permanently abolish the payroll tax — which
largely funds Social Security and Medicare — days after signing an
executive measure to defer the tax from September to December.
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Additionally, the president doesn’t hold the constitutional authority to cut taxes, although he is able to push back due dates.
And eliminating any tax liability would require congressional approval.
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