President Trump signs executive order deferring payroll tax cut after coronavirus stimulus talks stall
With congressional stimulus talks at a standoff, President Donald Trump signed a series of executive orders August 8 designed to blunt the economic impact of the coronavirus pandemic.
A key order defers the employee portion of Social Security taxes for many of the nation’s employees. The president asked Treasury Secretary Steven Mnuchin to look for ways, including legislation, to eliminate the obligation to pay the deferred taxes.
To be specific, the payroll tax cut executive order:
- defers withholding, deposit, and payment of the tax imposed by Code Sec. 3101(a) (the 6.2% employee tax that provides for old-age, survivors and disability insurance under the Social Security tax) and so much of the tax imposed by Code Sec. 3201 (Railroad Retirement Tax) as is attributable to the rate in effect under Code Sec. 3101(a) , on wages or compensation, as applicable, paid period of September 1, 2020, through December 31, 2020.
- is available with respect to any employee, the amount of whose wages or compensation, as applicable, payable during any biweekly pay period generally is less than $4,000, calculated on a pretax basis, or the equivalent amount with respect to other pay periods (and these amounts will be deferred without any penalties, interest, additional amount, or addition to the tax.)
House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., has met for more than two hours August 8 with Mnuchin and White House Chief of Staff Mark Meadows to salvage the talks – but in the end, both sides admitted they were at a standstill.
While the order has been signed, this is just the beginning – stay tuned for more legislative power plays.
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