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President Donald Trump’s weekend order to give millions of workers a break on payroll taxes caught many people by surprise, and created a range of reactions, criticism and questions.
One post on Facebook described the order as a scam that won’t affect your take-home pay.
"When Trump says he wants to suspend ‘payroll tax,’ he's talking about the 7.65% withheld for your Social ‘Security’ and Medicare. ~ Here's the scam: it would suspend the 7.65% your employer matches. See? You will NOT get that, nor will your wage or salary increase by 7.65%. Plus, when Social ‘Security’ collapses due to this de-funding, It WILL PROVIDE AN EXCUSE TO PRIVATIZE [steal it]," the post said.
This post was flagged as part of Facebook’s efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Facebook.)
In this case, the post is wrong on its first point, but does raise legitimate questions, even if it predicts the future with too much certainty.
On suspending the employer’s match, the worker’s and employer’s contributions are already separate. Under the March COVID-19 relief bill, the CARES Act, the employer portion is on hold until the end of the year. The CARES Act says that companies need to pay back half by the end of 2021 and the other rest by the end of 2022.
As for whether a worker will see the extra money, employers could decide not to pass along the deferral. Some business advisers are suggesting they do that as a hedge against uncertainty. We don’t know what employers will do, but this is a possibility.
A Facebook post claims, Trump’s plan "would suspend the 7.65% your employer matches. See? You will NOT get that, nor will your wage or salary increase by 7.65%"
The employer and employee payroll tax contributions are already separate, and the government already had deferred employer payment until the end of 2020. Trump’s action applies to the employee contribution, and it’s yet unknown if that deferral will reach the pockets of employees and when.
We rate this post Half True.
White House, Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster, Aug. 8, 2020
White House, Remarks by President Trump in Press Briefing, Aug. 8, 2020
Fox News, Fox News Sunday, Aug. 9, 2020
CNN, State of the Union, Aug. 9, 2020
Jenna Ellis, tweet, Aug. 8, 2020
Congressional Budget Office, The federal budget in 2019, April 2020
Social Security Administration, 2020 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, April 22, 2020
U.S. Bureau of Labor Statistics, USUAL WEEKLY EARNINGS OF WAGE AND SALARY WORKERS, July 17, 2020
Internal Revenue Service, Deferral of employment tax deposits and payments through December 31, 2020, July 30, 2020
Inc., Why Businesses Should Ignore Trump's Payroll Tax Holiday, Aug. 9, 2020
Forbes, White House Walks Back ‘Permanent’ Payroll Tax Cut Amid Social Security Concerns, Aug. 9, 2020
Bloomberg, Trump’s Payroll Tax Action Creates Political, Business Risks, Aug. 9, 2020
Kiplinger, What Trump's Payroll Tax Cut Will Mean for You, Aug. 10, 2020
Email exchange, William Hoagland, senior vice president, Bipartisan Policy Center, Aug. 10, 2020
Email exchange, Eugene Steuerle, economist and cofounder, Urban-Brookings Tax Policy Center., Aug. 10, 2020
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