Payroll tax holiday?

So, the NYT seems to think any deferred payroll taxes under Trump’s executive order last night will be due next year.

Further, the reduction in payroll tax withholding will raise income taxes due on each paycheck. So, if the courts allow this, it looks like a net loss of money until tax refunds come in. Quote from the article about payroll taxes:

The uncertainty raises a host of questions for companies and workers, including a cascade of intricate tax questions, according to a recent analysis published by Joe Bishop-Henchman of the National Taxpayers Union Foundation. (For example: If workers owe less payroll tax, they would owe slightly more income tax; would employers change, on the fly and in the middle of the year, how much income tax they withhold?)

Edited for terrible typos

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In the WSJ this morning they discussed that it is currently set up as a deferral (likely because he doesn’t have the constitutional authority to change the tax code with an EO) but that he is asking congress to waive the past due amounts so no one has to pay the past due amounts. However if that doesn’t happen, then that opens a whole different can of worms.

" If employers stop withholding those taxes, it would give workers a short-term increase in take-home pay but also create a looming liability in 2021 because the taxes would still be due eventually.

Mr. Trump said Saturday that he would ask Congress to waive any deferred tax liability and that he would try to make the payroll-tax cut permanent."

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Essentially we have no plan. Congress would have to grant the extension, but there’s possibility they could come due on Tax Day 2021.


He’s trying to set up a scenario where people can just vote for him and get more money in their paychecks. Or at least one where they think they can. It’s all very 2020.


Update from Forbes:

Now: “awesome! More money!”

Later: “whadda you mean I hafta pay it back?”