How Much Could Americans Receive Under President Trump’s Payroll Tax Deferral?
How do you feel about the payroll tax deferral?
by Causes | 8.21.20
What’s the story?
- President Donald Trump’s recent executive actions to extend coronavirus relief measures amid the ongoing impasse in Congress over relief legislation included a voluntary deferral of payroll taxes from September 1st through the end of the year.
- The deferral is open to employees who generally have a biweekly pre-tax income of less than $4,000 (or about $104,000 per year), and applies only to the 6.2% Social Security portion of the payroll tax.
- No interest would be charged on deferred amounts, which would have to be repaid in 2021 unless Congress acts to forgive the deferral ― something Trump and Treasury Secretary Steven Mnuchin have called for Congress to do.
- Employers have been weighing the pros and cons of participating in the deferral, with many waiting for further guidance on how it would be implemented. Some have raised concerns about employees who take advantage of the deferral having to repay those taxes if Congress fails to pass legislation forgiving the deferred amounts.
How much is the payroll tax deferral?
- After accounting for the four-month timeframe of the deferral, its application solely to the Social Security portion of the payroll tax, and the eligibility restrictions, USAFacts found that the estimated value of the deferred payroll taxes for the average households would be $520.
- This USAFacts chart breaks down the estimated payroll tax deferral based on household income bracket. The upper-middle class (the fourth 20%) would have $1,197 deferred on average, the most among the income quintiles, followed by the middle class (middle 20%) with $693 deferred:
- Given that there are roughly 150 million taxpaying households, USAFacts further estimated that the deferred payroll taxes from September through December would result in a delay of $78 billion in government revenue (which could ultimately be forgiven by Congress and added to the deficit).
- In FY2019, the U.S. collected $1.24 trillion in payroll taxes (roughly $103 billion per month) and spent $1.04 trillion on Social Security (about $87 billion per month), so the four-month deferral of $78 billion in payroll taxes would represent about 19% of payroll taxes collected monthly in FY2019. This USAFacts interactive chart breaks down sources of federal revenue and spending in FY2019:
— Eric Revell
(Photo Credit: White House via Flickr / Public Domain)
WATCH: Former FBI Director James Comey Testifies Before the Senate Judiciary Committee on Origins of Russian Collusion InvestigationWhat’s the story? Former FBI Director James Comey is set to testify before the Senate Judiciary Committee on Wednesday (10am
by Causes | 9.30.20
IT: Chaos and cross-talk at presidential debate, and... 🧾 Do you want to see Trump's tax returns?Welcome to Wednesday, September 30, Skittles and Starburst...Someone texted me after the debate, asking me who won and who lost.
by Causes | 9.29.20
NYT: Trump Paid $750 in Taxes in 2016, 2017 – Should Trump Release His Tax Returns?What's the story? President Donald Trump paid $750 in federal income taxes in 2016 - the year he ran for president - and 2017 -
by Causes | 9.29.20