Business leaders say they are unlikely to defer payroll taxes

WASHINGTON — Auto part suppliers, clothing sellers, retailers, restaurants and a torrent of top businesses signaled Tuesday they are unlikely to implement President Donald Trump’s order deferring payment of workers’ payroll taxes, threatening an early blow to a policy the White House has touted as a major form of economic stimulus.

Roughly 30 industry groups, led by the U.S. Chamber of Commerce, described Trump’s executive action as potentially “unworkable,” stressing in a letter to the administration and top congressional leaders that technical and logistical challenges are likely to prevent them from passing any extra income back to their employees as the president intended.

“Therefore, many of our members will likely decline to implement deferral, choosing instead to continue to withhold and remit to the government the payroll taxes required by law,” the business advocacy group wrote.

Trump signed the directive targeting the taxes that fund Social Security and Medicare after partisan disagreements on Capitol Hill kept lawmakers from agreeing on another coronavirus stimulus package. Trump’s order paves the way for workers to defer their tax bills — but it does not forgive the taxes outright, meaning employees will still owe the federal government come next year.

The U.S. Chamber and other business groups estimate that workers could incur tax bills as high as about $2,200 due in 2021, depending on their income, unless Congress absolves the debts — something Trump has sought but lawmakers have signaled they are unlikely to provide. As a result, the powerful business lobby said it would be “unfair to employees to make a decision that would force a big tax bill on them next year.”

“We hope Congress and the Administration come together on a path that supports workers instead of burdening hard-working Americans with a large tax bill next year,” the letter stated.

Judd Deere, a spokesman for the White House, responded in a statement that the president “used the authorities available to him” to help workers and still “encourages all employers to take advantage of this in order to support hardworking Americans during this period of economic uncertainty as we finish the fight against COVID-19.”

Trump’s order paves the way for workers to defer their tax bills — but it does not forgive the taxes outright, meaning employees will still owe the federal government come next year.