In light of many companies saying that they will not implement the Trump plan to defer federal payroll taxes through the end of the year, President Trump has ordered that payroll taxes not be taken out of the paychecks of federal employees, the Washington Post reports.
The order places hundreds of thousands of government employees in a position where they will be liable for reimbursement when the deferment expires at the start of the year. The repayment must be made by May 1st, meaning employees would have to double their federal payroll deductions for the first four months of the year to catch up.
With nearly 1.3 million people employed by the federal government, the short-term impact will be larger paychecks; the long-term impact could be a shortage in Social Security and Medicare funds, and a large tax bill for those employees who don’t increase their voluntary withholdings at the end of the year.
Trump has made a vague promise to void any outstanding taxes if he’s reelected, pushing the legality of the program and Trump’s pledge, as well as jeopardizing the funds that go into the so-called Social Security.
Everett Kelley, the national president of the American Federation of Government Employees, blasted Trump’s policy on Monday as a “scam that leaves workers with a substantial tax bill right after the holiday season,” according to the Post.
“Workers will have to pay double their regular payroll tax rate during the first four months of 2021, and if they cannot do so, they will have to pay interest and penalties on amounts still owed if they’re not paid back by May 1, 2021,” Kelley said.
Trump has also claimed that he will eliminate federal payroll taxes altogether if reelected, a promise that is not just dubious from the perspective of Executive authority but also politically idiotic. Doing do would mean that Social Security and Medicare would be defunded and unable to pay full benefits by 2023.