State employees won’t receive raise from payroll tax deferral

SPRINGFIELD — Illinois plans to continue withholding federal payroll taxesonbehalf of its 62,000 employees despite a program President Donald Trump launched in August that allows workers to defer paying those taxes through the end of the year.

“I’m not supporting a deferral that would double workers’ taxes after January and put Social Security further at risk. I mean, that’s essentially what this would do,” Illinois Comptroller Susana Mendoza said during an interview Thursday.

Trump announced the programin amemorandum along with other economic relief measuresAug. 8.

It applies to the 6.2 percent tax that employers withhold for their employees’ Social Security benefits. It often appears on pay stubs as FICA — the Federal Insurance ContributionsAct.

The program is available for employees who earn less than $104,000 per year.

The intent is to temporarily boost workers’ income during theCOVID-19 pandemic, but the taxes that would be deferred would have to be repaid after Jan. 1. Then, the employee’s withholding would double to 12.4 percent until the amount of taxes that were deferred is repaid.

So far, the only major employers taking part in the program is the federal government, Mendoza said.

Most states and many large private-sector employershave publicly stated that they will not take part.

Mendoza said Gov. J.B. Pritzker has already announced that the agencies under his purview will not take part in the program, nor will any of the other state constitutional officers — attorney general, secretary of state, state treasurer and attorney general.

“Just on its face, as a policy, to me it seemed really bad policy to essentially tell people that they can have a little bit of moneyon the front endand then pay twice as much on the back end and be prepared to do so,” Mendoza said.

“I reached out to the governor early on to let them know my position, thatwewould not be doing it for any of our employees, and of course recommended that no one do it because I think it’s terrible policy,” she said.

“And it’s really kind of a cruel hoax. I mean, the president’s essentially dangling this carrot in front of people. And I would say, this is that perfect scenario where all that glitters is not gold.”

According to an analysis by the U.S. Chamber of Commerce, a worker earning $50,000 a year would see a temporary increase of $119.23 in each two-week pay period. But at the end of the year, that person would owe $1,073.08 in deferred taxes.

Mendoza said she believes the program was devised to boost Trump’s reelection campaign.

“I mean, it couldn’t be any clearer,” she said.