The National Federation of Federal Employees has derided what it called the Trump Administration's "bewildering policy idea" of directing Federal agencies to no longer withhold payroll taxes for its employees, putting the burden on workers to pay their share of Social Security taxes for 2020 by next April.
President Trump had previously called for suspending payroll taxes that fund the Social Security program to help stimulate the economy, drawing sharp criticism from his Democratic challenger, Joe Biden, who noted that Social Security experts have warned that this could lead the program to exhaust its funds by 2023.
'A Dumb Idea'
NFFE President Randy Erwin said in a statement, "President Trump and the Treasury Secretary made fools of themselves by issuing this order and guidance," referring to Steve Mnuchin, who has emerged as a key political adviser to Mr. Trump. "Even the business community and the U.S. Chamber of Commerce believe this is a dumb idea."
He said that whatever short-term benefit Federal workers might derive from the additional money in their paychecks would be offset by their having to keep track of how much extra they would be obligated to pay in taxes next spring, with the Internal Revenue Service having issued guidance about the penalties with interest that would accrue if those payments were not made by the tax-filing deadline.
The union said the assumption was that rather than requiring employees to do the calculations, their employers would reduce their paychecks starting in January by 12 percent—6 percent of that reflecting the restoration of the tax, and an added 6 percent to cover the taxes they owed for the period in which the levy was suspended.
'Like a Forced Loan'
"Without consultation of Congress or stakeholder groups, and seemingly against the advice of the business community, the Trump Administration orchestrated this stupid tax plan which equates to a forced loan to Federal workers based on their payroll taxes," Mr. Erwin said. He added that the administration "ruled out the ability to opt out of this bizarre tax scam, so employees have to set this money aside in order to repay it early next year via increased deductions from their paycheck."
He said if the President really wanted to do something for his workforce, he should "just give Federal employees and the military the 3% raise that they deserve next year and stop playing games with their checkbooks."
Mr. Trump first proposed the payroll-tax cut in March, as the coronavirus began to take its toll on the economy, as a way to increase take-home pay for all U.S. workers. Amid criticism that those who would benefit disproportionately were the highest-paid Americans, the idea was shelved in favor of a proposal by U.S. Sen. Mitt Romney of Utah that all Americans receive a $1,000 stimulus check, which eventually was upgraded to $1,200, but with reduced amounts for those whose incomes exceeded certain limits.
During the Republican National Convention last month, the President's son, Donald Trump Jr., lamented that Democrats were thwarting the attempt to put more money in Americans' pockets through the payroll-tax cut, without mentioning the impact the reduction would have had on the viability of the 85-year-old Social Security program.
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