US House Employees Will Not Have Their Payroll Tax Deferred

September 11, 2020 Updated: September 11, 2020

Joining the ranks of some major private companies, the U.S. House of Representatives’ chief administrative officer announced that the House will not be implementing President Trump’s payroll-tax deferral for its employees.

The lower chamber “determined that implementing the deferral would not be in the best interests of the House or our employees,” Philip G. Kiko, the chamber’s chief administrative officer, said in an email to employees. “As a result, we will not implement the payroll tax deferral.”

President Donald Trump announced the payroll-tax deferral in early August, initiating it after a stalemate in Congress over further pandemic aid and as his way of getting money to households during the economic downturn. The deferral is available for workers making less than $104,000 a year.

The President’s executive order delayed taxes but did not eliminate them because only Congress can do that. Trump also urged lawmakers to approve a transfer of federal funds that would keep the Social Security trust fund intact, allowing the delayed taxes to be forgiven without harming social security benefits.

Democrats have opposed Trump’s payroll tax deferral, citing that in the long run, it will destroy social security and Medicare benefits.

In a joint statement issued late on August 8, Pelosi and Senate Minority Leader Chuck Schumer (D-N.Y.), called the executive order “weak and narrow,” which would, “slash the unemployment benefits that millions desperately need and endanger seniors’ Social Security and Medicare.”

Rep. John Larson (D-Conn.), the chairman of the House Ways and Means Committee’s Social Security subpanel, along with 20 of his Democrat colleagues, on Sept. 4 announced two initiatives—the Save Our Social Security Now Act and a Congressional Review Act resolution—both seeking to overturn Trump’s tax deferral.

The executive order that Trump signed lets the 6.2 percent payroll tax be deferred from Sept. 1 through the end of the year. After Dec. 31, employers are to start collecting the taxes that are owed, leading to a situation in which workers receive less in take-home pay next year.

“This order is reckless, unworkable, and gives new meaning to the term ‘surprise billing,’” Larson said in an earlier statement. “Early next year Americans will be required by Trump to pay double to make up for this pointless charade!”

Larson’s bill seeks to overturn guidance (pdf) issued by the Internal Revenue Service (IRS) on Aug. 28, which implements the payroll tax deferral. The Congressional Review Act resolution would similarly nullify the IRS guidance, but through a joint resolution of disapproval in the Senate.

Trump said he plans to forgive the deferred taxes if reelected, but such a move would require congressional action and there’s no guarantee that Congress would pass legislation on forgiveness.

“When we win I, as your President, will totally forgive ALL deferred payroll taxes with money from the General Fund,” he said on Twitter on Sept 10.