Auto part suppliers, clothing sellers, retailers, restaurants and a torrent of top businesses signaled Tuesday they are unlikely to implement President Trump’s order deferring payment of workers’ payroll taxes, threatening an early blow to a policy the White House has touted as a major form of economic stimulus.
“Therefore, many of our members will likely decline to implement deferral, choosing instead to continue to withhold and remit to the government the payroll taxes required by law,” the groups wrote.
Trump signed the directive targeting the taxes that fund Social Security and Medicare after partisan disagreements on Capitol Hill kept lawmakers from agreeing on another coronavirus stimulus package. Trump’s order paves the way for workers to defer their tax bills — but it does not forgive the taxes outright, meaning employees will still owe the federal government come next year.
The U.S. Chamber and other business groups estimate that workers could incur tax bills as high as about $2,200 due in 2021, depending on their income, unless Congress absolves the debts — something Trump has sought but lawmakers have signaled they are unlikely to provide. As a result, the powerful business lobby and others said it would be “unfair to employees to make a decision that would force a big tax bill on them next year.”
“We hope Congress and the Administration come together on a path that supports workers instead of burdening hard-working Americans with a large tax bill next year," the letter stated.
Judd Deere, a spokesman for the White House, responded in a statement that the president “used the authorities available to him” to help workers and still “encourages all employers to take advantage of this in order to support hardworking Americans during this period of economic uncertainty as we finish the fight against covid-19.”
The letter reflects the wide-ranging skepticism that has greeted the president’s order from a broadening spectrum of businesses: Major Washington groups representing home furnishers, electrical contractors, drugstores, manufacturers and wine sellers all signed the missive that lamented the “uncertainty” the White House has created. Others have raised the potential that businesses would face a massive logistical lift just to update their payment systems so they could withhold or defer payroll taxes by the time the directive takes effect Sept. 1.
Their dour assessment stands in contrast to Trump’s pledge this month that his actions would result in “bigger paychecks for working families.” In doing so, Trump also sought to turn the order into an argument for his reelection, promising if he prevails in November that he would make “permanent cuts to the payroll tax.” The political pledge has met an icy reception on Capitol Hill while infuriating organizations including AARP, the lobbying powerhouse for older Americans, which warns that the White House policy could affect the future financial solvency of Social Security and Medicare.