The Trump Administration has signaled it will oppose new relief legislation during the COVID-19 pandemic unless an aid bill includes a “payroll tax holiday.”

In early May, President Donald Trump said he would not support a relief bill without such a measure.

“I want to see a payroll tax cut on both sides, a very strong one, because that’s going to really put people to work,” Trump said in a virtual form on Fox News, where he appeared with Treasury Secretary Steven Mnuchin. “And I told Steve just today, we’re not doing anything unless we get a payroll tax cut. That is so important to the success of our country.”

In an interview with The Washington Post, White House economic adviser Stephen Moore said, “High-ranking White House officials have told me that we will not sign a phase four deal without a payroll tax cut.”

A spokesperson for the White House said the president has “called on Congress to pass this before and he believes it must be part of any phase four package.”

The Committee for a Responsible Federal Budget has estimated a three-month payroll tax holiday would cost $300 billion. The 7.65% tax currently funds Medicare and Social Security.

The tax holiday has been opposed by prominent Congressional leaders, Democrat and Republican.

“I’m not a particular fan of that,” Senate Majority Whip John Thune, Republican for South Dakota, said. “I guess I’m open to being persuaded that it’s something that could be effective, but I think some of the things that we are currently doing are having a bigger impact.” Oregon Democrat Senator Ron Wyden said it would be a “big mistake” to pass the cut.

“What they want to do is hit Social Security like a wrecking ball with a massive tax cut for the country’s biggest corporations,” Wyden said. “We are going to oppose this with everything we have.”

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2 responses to “Trump Administration Pushes for Payroll Tax Cut”

  1. If the objective is to encourage companies to hire or re-hire employees, a payroll tax cut is a ridiculous idea. Businesses are not going to hire personnel because they don’t have to pay Medicare and Social Security taxes related to such employees. Businesses will hire additional employees when there is work for them to do. A restaurant will not hire waitstaff, a small retail outlet will not hire sales clerks, a hotel will not hire housekeepers and desk clerks unless the business has work for those employees to do. Thoughtful, tailored unemployment benefits that will provide people who have been furloughed or terminated because of the coronavirus pandemic with money to spend will provide the impetus business needs to expand current levels of employment. Those benefits should not be so generous as to discourage recipients from accepting jobs offered but should be sufficient to allow for some discretionary spending.

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