Senators: Let workers choose on payroll tax
Top Senate lawmakers urged the Trump administration on Tuesday to halt its plans to implement a mandatory payroll tax deferral for millions of federal employees, arguing that these workers should not be treated as political “pawns.”
The issue stems from an order issued by President Donald Trump in August, which allows participating employers to cease withholding their workers’ payroll taxes until the end of the year. Private-sector employees may be able to opt out of the plan, but federal workers do not appear to have a choice — meaning they will see a slight boost to their pay now, then owe even more in 2021.
The forced nature of the president’s order frustrated roughly two dozen lawmakers led by Democratic Maryland Sen. Chris Van Hollen, who blasted it as a “payroll tax scheme” and demanded answers in a sharply critical letter sent to the Treasury Department and the Office of Management and Budget, which are overseeing implementation of the deferral.
“We urge you to let federal workers and uniformed service members choose whether to defer their payroll tax obligations … rather than forcing them to participate,” wrote Van Hollen along with Sens. Susan Collins, R-Maine, Charles Schumer, D-N.Y., Bernie Sanders, I-Vt., and 19 other lawmakers, all of whom are Democrats.
“While some federal employees may want to defer their payroll tax payments,” the lawmakers continued, “unions representing federal workers have made clear that many others do not.”
Spokespeople for the two federal agencies did not immediately respond to a request for comment.
The bipartisan rebuke marks only the latest assault against Trump’s payroll tax order, one of a series of actions he announced in August in an attempt to circumvent a lingering congressional stalemate over another round of coronavirus aid. In signing the directive, Trump promised he would boost workers’ take-home pay and pledged he would “terminate” the taxes Americans accrue over the next four months so that they don’t have to repay them in January.
Weeks later, however, the president’s vision appears to be in tatters. A wide swath of companies have signaled they simply may not implement Trump’s order at all, threatening to undermine the White House’s attempts to stimulate the economy. Trump’s aim to absolve Americans’ tax debts, meanwhile, has garnered little meaningful support among the very lawmakers who would have to approve such a law.
In the meantime, the federal government has forged ahead with its own plans to implement the president’s deferral for millions of federal workers. Official guidance sent to these employees in recent days has indicated they are unable to opt-out of the program, even as private companies offer their workers the ability to decline to participate.
The approach has incensed unions, one of which urged Congress
this month to block the U.S. government from imposing Trump’s order as part of its next bill funding federal operations. Democratic lawmakers are “planning to pursue that in any continuing resolution,” Van Hollen said in an interview Tuesday.
Military and civilian employees also are subject to the deferral, a payroll processor for the Pentagon confirmed over the weekend. In doing so, it specified in bold, italicized, underlined guidance posted online that they are “not eligible to opt out of the deferral.”
The approach frustrated lawmakers, including Van Hollen, who said Trump had sought to “sow mass confusion” around a tax deferral that eventually must be repaid. “The president wants them to believe they got this bonus,” he said.