Politico

Trump's payroll tax deferral nixed for House employees


House employees won’t have their payroll taxes deferred under President Donald Trump’s recent order, a top House official said Friday in the latest setback for the administration’s ill-received plan.

The temporary tax deferral “would not be in the best interests of the House or our employees,” Philip G. Kiko, the chamber’s chief administrative officer, wrote in a memo, adding that the House Administration Committee concurred.

Democrats have been sharply critical of the deferral, which applies to the 6.2 percent tax workers pay for Social Security. Employers can choose to participate in the deferral or not.

It wasn’t immediately known what the Republican-controlled Senate will do.

The deferral, which is available for workers earning less than $104,000 a year, was one of several unilateral moves Trump made in August that he said would boost the coronavirus-battered economy.

But the administration has had a hard time convincing private-sector employers to take part in the plan. Companies are concerned it is too risky or complicated, especially if Congress doesn’t ultimately excuse workers from having to pay back the taxes when the deferral expires at the end of the year.

Kiko raised similar concerns, citing recent Treasury Department guidelines.

“The taxes are deferred, and absent subsequent action by Congress, employees still owe, and employers are still required to collect the taxes,” he wrote. “Starting in January of 2021, employers would be required to begin withholding taxes from paychecks at higher rates to fully collect the tax owed by April 30, 2021.”

“Like all pay disbursing officials, the CAO must weigh the benefit of the deferral against the challenges of implementing this change and the practical impacts to the House workforce.”

The administration recently announced that the deferral would be applied to the paychecks of executive branch employees and the military. They’d have to repay their obligations next year unless Congress makes the deferral permanent.

Some GOP lawmakers have said they would like to hold back payroll taxes for their staffers under Trump’s directive. Kiko’s office didn’t immediately respond when asked if his decision was binding across all House offices.

But a Democratic staffer said it removes the option for Republican lawmakers, unless they get Kiko to alter his decision or create an exception. The administrative office has total control over payroll and would have to be directly involved in any kind of deferral, the staffer said.

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