Payroll tax holiday begins today. What it means. (debt, paycheck, money)
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- it is a tax deferral. the 6.2% tax employees pay toward Social Security from Sept. 1 until Dec. 31 must be repaid by apr 30 next year, which means smaller paychecks.
Quote:
The Social Security tax is subject to an annually adjusted wage cap ($137,700 in 2020), but the Medicare tax is assessed beyond that threshold.
I believe this means for high earners, this won't affect them as they would've already paid all SS taxes at this point (e.g. you've already seen your paycheck increase, as soon as you've passed this threshold).
This is a mess. The least they could have done is treated everyone the same (low income and high income). This current treatment creates an unnecessary burden for employers.
I thought Trump didn’t have the power, even with an executive order, to implement this. Did anyone challenge this in court? And what does this mean for the Social Security fund?
I thought Trump didn’t have the power, even with an executive order, to implement this. Did anyone challenge this in court? And what does this mean for the Social Security fund?
This doesn't impact the Social Security fund. The fund has enough money to cover a few months.
What is means is not clear. On it's face, it is a tax deferral. But there are a number of ways to make it tax forgiveness, including one that President Trump can do on his own. Specifically, in terms of action that President Trump can take on his own, he can issue blanket pardons to anyone who has taken advantage of this deferral once the period ends (but it would only be backward not forward looking, which shouldn't be a problem), which would effectively make it tax forgiveness as people couldn't be prosecuted for failure to repay. But I don't think it'll even get to that point as I see no politician (not even Democrats) who are going to willingly let the middle class have a huge tax bill; it would be political suicide. Thus, I expect a legislative remedy at the very least.
As to @selhars' point, yes the president has the power to implement this as it fits squarely within enforcement discretion, which every president and elected executive official has generally.
This doesn't impact the Social Security fund. The fund has enough money to cover a few months.
Of course, it does. Trump promises to eliminate the obligation to return the money. In the meantime, publicly held debt will increase more than if the operating surplus of Social Security had been allowed to continue. It's already showing up in the data.
Of course, it does. Trump promises to eliminate the obligation to return the money. In the meantime, publicly held debt will increase more than if the operating surplus of Social Security had been allowed to continue. It's already showing up in the data.
The executive order is a temporary holiday with the obligation to pay the difference. It does not impact social security.
Hoping my employer does not but they have not yet announced a plan.
That's because without a guarantee this will be forgiven, guess who is on the hook if you quit before the repayment is due? ex-employer! Guess who will start quitting at the end of the year if Trump loses the election? A LOT of people.
Was this well thought out? No. Was it a good idea to choose a Manhattan condo salesman to run the country? Probably not
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