President Donald Trump signed executive orders on Saturday providing additional financial support to Americans hard hit by the coronavirus pandemic, after his negotiators failed to reach a deal with Congress. The orders ask for extra unemployment benefits of $300 from the federal goverment and an other $100 paid by the States, making it a total of $400. Unfortunately, the funds might not make it to the individuals as intended. States cannot make payments without an act from Congress, which therefore makes them ineligible to receive the $300 from the federal government for extending the UI benefits. The other portion of the order defers payroll tax.
It is not a payroll tax “holiday”. It is a deferment. Yes. The President has the ability to instruct the IRS to defer tax payments for up to a year but that doesn’t mean the bill disappears. It is deferred. The President does not have the ability to unilaterally forgive taxes. Only Congress does. So the deferred taxes will be due from individuals and businesses as soon as the deferment period is over.
No business in their right mind would ever take that gamble and actually defer those taxes. If they aren’t forgiven they will not only be on the hook for their 7.65% they owe but also the 7.65% they failed to withhold from their employees. So the business would owe the IRS 15.3% of their entire operating payroll for six months. Any company would be out of their mind to do that and risk further financial ruin on the promise that it may be forgiven at a later date.
Not to mention that a payroll tax cut is a backdoor method of cutting social security and medicare. So sticking it to the old people…again.
People are desperate for that money, but the way Trump is doing this is highly illegal. This puts everyone in a tough spot. The Democrats need to fight it, but that will mean greater hardship for people. The right thing will cost them votes, as he can now argue they’re taking money away. If they do nothing, they are allowing this lawlessness and their own negotiating position is severely undercut when they were fighting for important things behind cash payments and unemployment.