The President’s August 8th order to defer payroll taxes to the end of 2020 is underway. Well, sort of. Federal employees are the guinea pigs as it appears many private sector employers will opt-out. The deferral has employees concerned about what they’ll owe in taxes beginning 2021. Perhaps more concerning is if President Trump’s promise to eliminate the payroll tax altogether in 2021 – pending reelection – becomes reality.
The payroll tax funds Social Security. Employers and employees are taxed to fund the program. According to people who oversee the fund, if the payroll tax is eliminated – as the President promised – without a funding replacement, Social Security would run out of money in 2023.
To be clear, what is taking place for the rest of 2020 is a deferral. Those who have their payroll taxes deferred will still need to pay what is owed at a later date. Concern from those employees about a large lump sum coming due are warranted.
Trump’s executive order to defer collection of payroll taxes came after negotiations stalled in Congress over another covid19 relief package. Trump has been obsessed with the payroll tax. Around the same time of his order, Trump said “We will be, on the assumption I win (reelection), we are going to be terminating the payroll tax after the beginning of the new year.”
The President cannot unilaterally eliminate a tax. That takes Congress. Though there has been bipartisan resistance to the idea, some in Congress have shown Social Security is on their radar. North Dakota Senator Kevin Cramer is one of them.
Earlier this year, Cramer said, “we just have to be willing to bite the bullet” on changes to Social Security and Medicare. Cramer isn’t the only NDGOP official open to drastic changes to Social Security. Fifteen years ago when President George W. Bush sought to privatize Social Security, many Republicans distanced themselves from the proposal. Not in North Dakota. Rick Berg was a ND legislator at the time and offered a resolution encouraging Congress to approve the changes.
Berg’s testimony at the time, “The federal government has personal savings accounts for many of the federal employees that put money aside for retirement, and I think it is time for Congress to look at this for individuals. Not to mandate them, but to give them an option, if they want to try to put some of their money in a personal account, that they in fact could do that.” Fellow legislators like Jim Kasper supported the resolution to urge Congress to adopt changes.
Rick Berg is now the chair of the NDGOP. Their party platform caught a lot of attention for the awful things they approved on other social issues. Once called out, they tried to distance themselves from what they already approved. That same platform – without naming Social Security specifically – is riddled with language that appears to support moving away from Social Security as a collective safety net. Can they be trusted with something so vital?
If desired reform to Social Security for people with disabilities, Medicare for senior citizens, and Medicaid to single mothers is due to the growing national debt, the administration needs to reflect on their own fiscal stewardship. The national debt is growing by the minute. The rushed tax cut in 2017 primarily benefiting hedge fund managers hasn’t trickled down to the people reliant on these programs. As the 2020 campaigns ratchet up, expect the projection of self-described fiscal hawks to try and gloss over their real record of increasing the debt and using it as an excuse to cut programs our most vulnerable neighbors rely on.
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