Trump’s executive order on payroll tax deferral “unworkable”: business groups

Washington, US | XINHUA | More than 30 major U.S. business groups said on Tuesday that they’re unlikely to implement President Donald Trump’s recent executive order (EO) on payroll tax deferral as it would prove “unworkable” and impose a large tax bill on American families next year.

“Under current law, the EO creates a substantial tax liability for employees at the end of the deferral period,” these business groups, including the U.S. Chamber of Commerce, wrote in a letter to House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell and Treasury Secretary Steven Mnuchin.

“Without Congressional action to forgive this liability, it threatens to impose serious hardships on employees who will face a large tax bill as a result of deferral,” the letter said.

In an attempt to circumvent Congress, Trump earlier this month signed a series of executive orders to extend certain COVID-19 economic relief, including deferring the payment of employee payroll taxes from September through the end of the year.

While U.S. employees may get a relatively small benefit of deferral this year, they could incur payroll tax bills as high as about 2,232 U.S. dollars due in 2021, depending on their income, according to calculations by the U.S. Chamber of Commerce.

“Many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year. It would also be unworkable to implement a system where employees make this decision,” the letter said.

“Many of our members will likely decline to implement deferral, choosing instead to continue to withhold and remit to the government the payroll taxes required by law,” the letter noted, urging Congress and the Trump administration to work together to provide much-needed tax relief to American families without imposing a large tax bill in the future.

The letter came as congressional lawmakers and White House officials remain deadlocked over the next COVID-19 relief bill. Economists have warned that the U.S. economy is at serious risk of sliding back into recession if the White House and Congress couldn’t reach a deal on another fiscal rescue package in the coming months.

“The inability of Congress and the administration to reach a compromise has a very real and very large human cost,” Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce, said Tuesday in a statement.

“For schools and businesses to get the resources they need to safely reopen, for small businesses to keep their doors open, and for those that have lost their jobs to continue to provide for their families, Congress must act. There is no excuse for inaction,” he said.

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