Trump’s payroll tax holiday threatens progressive schemes
Trump’s payroll tax holiday could add an additional $100 billion to working households over the next four months, partially fulfilling a long-cherished goal of conservatives to get rid of the tax that hurts American working families the most.
And if it’s up to Trump, he’ll make the tax cut permanent.
“If I’m victorious on Nov. 3, I plan to forgive these taxes and make permanent cuts to the payroll tax,” said the president when signing the executive order suspending payroll tax collection. “I’m going to make them all permanent.”
During the last round of negotiations for COVID economic relief, Trump favored getting rid of payroll taxes but was told by GOP congressional negotiators that a deal would be impossible.
Senators and representatives prefer to send COVID relief checks directly to constituents rather than add the money to worker’s payroll checks.
Economist types in D.C. hate the idea of a payroll tax elimination because it funds programs like Social Security and Medicare. But it remains popular with all segments of taxpayers who enjoyed payroll tax cuts under George W. Bush and Barack Obama as part of stimulus measures.
Many say that the shortfall will affect Social Security’s cash balance, but Secretary of the Treasury says that money from the government’s general fund can be transferred to cover any shortfall.
Since the money for any COVID relief will have to be borrowed no matter what, the means of getting the money is a bookkeeping matter, not a matter of policy.
“Virtually all Americans who are working are going to see a nice boost in their paychecks,” said Stephen Moore, who co-founded the Club for Growth and favors a payroll tax cut. “That puts money in the economy and incentivizes people to work. I think that’s a very positive effect.”
Still, Trump, if reelected, will have to come to some sort of an agreement with Congress to either forgive the payroll taxes not collected now, or eliminate the tax altogether.
Or he’ll leave the chore to his successor who will have to either raise taxes or forgive the debt, which will likely make it more difficult to forgive student loan debt without general tax reform.
One thing is for sure: Progressives are livid, understanding the threat to cherished progressive goals like single-payer health care and free universal college education now that Trump has introduced payroll tax elimination into the debate.
“Make no mistake: Terminating Social Security’s dedicated revenue will terminate Social Security,” says the Bangor Daily News. “If Trump is reelected in November and makes good on his promise, Social Security will be gone.”
No, it really won’t be.
But now that workers have gotten payroll tax relief it will make them less likely to want to pick up the tab for more financial windmill schemes by Democrats.
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