Donald Trump is fixated on including a “payroll tax cut” for the rest of the year in the COVID-19 economic response package.
Eliminating payroll contributions is a terrible idea in so many ways.
Here’s how it would work: Instead of paying into our Social Security system on 6.2% of your first $137,700 in wages, and having your employer match that, nothing would go into Social Security and your employer keeps the money that was budgeted for your benefits.
Dropping that contribution to zero would put some money in some pockets. But here’s the thing: while the savings would not amount to a significant sum for most workers, it would be a massive handout to corporate employers, who get to keep 6.2% of the salaries of hundreds of employees.
NOT ALL BENEFIT
Worse, this cut would only apply to salaried workers, or hourly workers who are continuing to show up to work despite the pandemic. It wouldn’t do anything for tipped workers, employees who lose shifts because of the economic slowdown, or people who lose their jobs entirely.
So the most vulnerable people literally would not get one penny.
TRAP FOR SOCIAL SECURITY
Not only is this bad policy, it also sets up a trap that endangers our Social Security system.
Even if the lost Social Security contributions are repaid into the trust fund by the government’s general fund, the December 31 expiration of this cut would appear to workers as a steep tax hike after eight months of zero payments. If Trump is re-elected in November, he will look to make the cut permanent. Or, alternatively, Republicans will say that the first act of the new Democratic president was a 12% tax increase.
Donald Trump has been clear: He’s proposed Social Security cuts in each of his budgets. He’s now given two interviews in 2020 where he promised to cut Social Security and Medicare.
Social Security Works