Watchdog Calls for Real Tax Relief to Replace Executive Actions

For Immediate Release
August 9, 2020
Contact: Grace Morgan
(202-855-4380)

WASHINGTON, D.C. – Today, the Taxpayers Protection Alliance (TPA) urged lawmakers to address recent changes to payroll tax liability and unemployment insurance implemented via executive actions. TPA also criticized President Trump for circumventing Congress by passing these executive actions. On August 8, President Trump signed an executive memorandum suspending the withholding, deposit, and payment of employees’ payroll taxes from September 1 through the end of the year. This deferral applies to workers earning less than $8,000 per month.

The President also ordered the continuation of federal unemployment benefits at $300 per week (with states expected to contribute an additional $100 per week) to be funded through the Department of Homeland Security’s Disaster Relief Fund (DRF). These bolstered benefits will be available “for eligible claimants until the balance of the DRF reaches $25 billion or for weeks of unemployment ending not later than December 6, 2020, whichever occurs first…” President Trump also moved to suspend student loan payments through the end of the year and provide additional assistance to struggling renters.

TPA President David Williams criticized the executive actions and urged a Congressional response, stating, “lawmakers have gone on vacation without addressing the needs of struggling Americans. The Constitution is clear: tax and spend policies fall under the purview of lawmakers and President Trump’s stopgap measures will face considerable legal challenges unless addressed by Congress. In particular, payroll tax relief is a laudable goal and would help millions of Americans pay their bills on time. But, unless lawmakers clarify and codify policy changes, there will be continued uncertainty over how much Americans owe the federal government and when. Now is the worst possible time for that uncertainty. President Trump has overstepped his authority by enacting these executive actions, setting a disturbing precedent that could give the next President unlimited spending and taxation powers.”

Williams continued: “Despite this dubious legality, President Trump’s payroll tax deferral will add up to significant savings for workers and their families. An employee earning $50,000 per year will see more than $1,200 in total savings. In total, delaying the withholding and payment of payroll taxes will put more than $150 billion in the pockets of hard-working employees. But, absent any clarification or affirmation by Congress, this saved income could easily vanish at the end of the year. There’s no guarantee that the deferral will amount to permanent tax relief absent lawmakers turning the payroll tax holiday into more permanent savings. The American people deserve tax reform and relief from Congress. Lawmakers need to come back from vacation and pass permanent payroll tax reductions into law.”

Williams concluded: “Congress must also address a broken unemployment insurance system that pays more to stay at home than find gainful employment. Keeping unemployment compensation as a fixed number instead of tying it to previous worker pay is a recipe for disaster. Lawmakers have their work cut out for them, but only their actions – not Presidential orders and memoranda – can deliver real, long-term relief for the American people.”

#