August 28, 2020 (Washington, D.C.) – Rep. Don Beyer today blasted the Trump Administration’s announcement that it would begin deferring withholding payroll taxes in September for federal employees, a move that could hit thousands with unanticipated large tax bills next year. Beyer, who represents the largest number of federal employees of any U.S. Representative, serves on the House Ways and Means Subcommittee on Select Revenue Measures, which has jurisdiction over tax policy.
“The Trump Administration’s plan to initiate payroll tax deferrals for civil servants treats the federal workforce as a guinea pig for a bad policy that businesses already rejected as ‘unworkable,’” said Beyer. “This payroll tax deferral does not really put money in workers’ pockets, it simply sets up the members of the federal workforce who can least afford it for a big tax bill that many will not expect. Like Donald Trump’s other economic executive orders, this will not provide actual relief to workers, it is just another gimmick intended to give the appearance of action as the White House continues to stall negotiations for a real stimulus package. The legal authority for this announcement is at best dubious, the policy will do more harm than good, and I intend to press the Administration about this.”
The announcement on payroll tax deferral for federal employees, made in a memo published by the National Finance Center, followed President Trump’s Executive Order “deferring payroll tax obligations” issued on August 8. Business groups previously rejected the order as “unfair” and “unworkable.”
The Social Security Administration’s Chief Actuary wrote to members of the Senate earlier this week that the Trump Administration’s plan to defer payroll tax contributions would force Social Security benefit cuts by 2021 and “permanently deplete” a key Social Security trust fund by 2023.