Finance

Democratic senators offer bill to make payroll tax deferral optional for federal workers

Greg Nash

A group of Democratic senators on Friday rolled out legislation that would make President Trump’s payroll tax deferral optional for workers whose employers are participating, including federal workers and members of the military.

“President Trump is using federal employees and our troops as pawns in his payroll tax scheme, and it’s unacceptable,” Sen. Chris Van Hollen (D-Md.), the lead sponsor of the bill, said in a news release. “During this time of heightened uncertainty, our public servants deserve the ability to choose what makes most sense for them and for their pocketbooks. That’s why the President’s payroll tax deferral must be made optional.”

Trump directed the payroll tax deferral in an August memo as part of a series of orders aimed at providing relief to Americans during the coronavirus-related economic downturn. Under the IRS guidance implementing the memo, employers can choose to stop withholding Social Security taxes from their employees’ paychecks through the end of the year, and then recoup the money by increasing the amount that’s withheld in the first few months of 2021.

Most private-sector employers are not implementing the deferral, because they don’t want to be in a position where their employees could see smaller paychecks next year. But Trump’s Office of Management and Budget announced that it’s deferring payroll taxes for executive branch employees. Federal agencies have indicated that their employees can’t opt-out of the deferral.

Democratic lawmakers and unions that represent federal employees have been pushing for the past several weeks for the deferral to be optional for federal workers and members of the military. Van Hollen’s bill is co-sponsored by more than a dozen Senate Democrats, as well as groups that include the American Federation of Government Employees (AFGE) and the National Treasury Employees Union.

“The President’s payroll tax deferral scheme is nothing more than a scam on hardworking federal employees — making their paychecks look bigger until the end the of the year when they’ll be hit with a surprise increase in their payroll taxes right after the holidays,” said AFGE National President Everett Kelley said. “We wholeheartedly support Senator Van Hollen’s bill to protect federal employees from this unwelcome surprise by requiring their written consent before their payroll taxes can be deferred.”

Tags Chris Van Hollen Donald Trump

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