Given the recent market volatility and likely economic fallout from the Corona virus driven slow down, the Trump administration has finally started proposing fiscal stimulus measures. This includes a payroll tax cut which will allow employees to take home or pay and reduce the tax burden on employers.
“Very substantial relief that’s a big number,” Trump said. “We’re also going to be talking about hourly wage earners getting help so that they can be in a position so they are not going to ever miss a paycheck,” he said. President Trump has urged Congress to approve a payroll tax cut until the end of the year, as the novel coronavirus continues to weigh on the U.S. economy.
“If you want to get money into the hands of people quickly & efficiently, let them have the full money that they earned, APPROVE A PAYROLL TAX CUT until the end of the year, December 31,” Trump wrote in a tweet. “Then you are doing something that is really meaningful. Only that will make a big difference”
The opening proposal from the administration is a 0% payroll tax rate for employers and employees that would last through the rest of this year.
Regardless of the way a payroll tax cut would be implemented it would likely most help households least in need (since the cut is a percentage of income up to $137,000) and would undermine Social Security, the program most dependent on the payroll tax which funds this program.
While the Republican controlled Senate is generally supportive of this move, the Democratic controlled house is not. Concerns are around whether this will have any real longer term impact and the fact it will continue to our already ballooning deficit.
Details are still pending but I will continue to update this article as more information comes out. There’s also the talk of additional tax cuts to boost consumer demand against the slow down driven from the coronavirus. Please subscribe to stay up-to-date with the latest updates.