An Executive Order signed in August by President Trump allowing employers to put off the collection of a tax used to fund Social Security has so far not been widely embraced by the private sector, according to reports.
According to the order, the deferral would make it possible for employers, as of September 1, to suspend the 6.2% tax until the end of the year.
The President said the deferral was directly applicable to any workers whose “pay period generally is less than $4,000.”
White House economic adviser Larry Kudlow has described the payroll tax deferment as essentially a “gigantic wage increase,” explaining that it could leave the average worker with up to $1,200 more in pay between September and December.
By the parameters of the executive order, all payroll taxes would be re-imposed in January and increased in order to make up for loss revenue from the deferral.
A number of large companies, including Home Deport Incorporated, the Costco Wholesale Corporation, and CVS Health, have since announced that are declining to be a part of the deferral program.
In an interview with the website SHRM Online, Caroline Harris, vice-president of tax policy at the U.S. Chamber of Commerce, observed: “Given the numerous implementation challenges, remaining outstanding questions and the extremely short implementation period, employers are likely to continue withholding and remitting payroll taxes to the Treasury.”
Adds Construction Dive: “The administrative burden for employers will be especially hard if some employees want to take the deferral and others don’t.”
The executive order is mandatory for federal employees.
Mike Rigas, acting deputy director with the Office of Management and Budget, has just issued a memo advising all federal agencies to “coordinate with its payroll provider to disseminate information to employees, and to answer questions they may have.”
The federal payroll tax has been in existence since the passage of the Social Security Act in 1935.
By Garry Boulard
