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Business groups say Trump’s payroll-tax order could stick employees with large bills

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  • A coalition of business groups signed a letter saying that Trump’s payroll tax holiday order would be “unfair to employees.”
  • “Many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year,” the letter said.
  • They said workers could be stuck with hefty tax bills next year, with some up to $2,232, given the order only defers payments.
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A group of prominent business leaders across the retail, manufacturing, clothing, and restaurant industry signed a letter to the White House and top lawmakers in Congress on Monday calling President Donald Trump’s payroll tax order “unfair to employees,” and possibly “unworkable” for employers.

The business groups, spearheaded by the US Chamber of Commerce, said carrying out the order could lead to hefty taxes down the road for workers.

“Many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year,” the letter said. “It would also be unworkable to implement a system where employees make this decision.”

Groups representing drugstores, wine-sellers, and credit unions all signed onto the leader, and they signaled they would continue

The coalition said implementing the order would be “less challenging” if it were an outright suspension. But its merely a deferral of tax payments into next year, and business leaders said “employees would be stuck with a large tax bill in 2021.”

The letter also included estimates of potential tax bills next year based on employees’ annual income, calculated over 9 pay periods:

  • $35,000: $751.15
  • $50,000: $1073.08
  • $75,000:  $1609.62
  • $104,000: $2232.00

“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,” they said.

Earlier this month, Trump signed an executive action delaying the collection of payroll taxes. People earning under $104,000 yearly don’t have to pay the tax through the end of the year.

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It’s a levy that employers usually take out of workers’ paychecks, and it helps finance Social Security and Medicare. But the payroll tax order only suspends the 6.2% tax on employees’ that funds the latter program.

Many experts said workers were unlikely to see bumps in their paychecks from the order, given the enormous risks for both workers and employers. Employers could be on the hook for any missed payments and incur significant penalties from the federal government. Only Congress can step in and waive the tax bill, a move Trump has called for. 

But the idea hasn’t gained significant traction among Republicans or Democrats on Capitol Hill.

Trump has also pledged to eliminate the payroll tax entirely if he is reelected in November. That triggered significant blowback from groups like the AARP, an influential lobbying group for older Americans.

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