Representative John Larson, D. Connecticut, chair of the Ways and Means Committee’s Social Security Subcommittee, has introduced legislation – the Save Our Social Security Now Act – that would override the measure Trump introduced at the start of August. He also proposed a Congressional Review Act to repeal the IRS directive alongside other House Democrats, including Ways and Means Committee Chairman Richard Neal.
Legislators introduced the legislation after Senators Chuck Schumer, DNY, and Ron Wyden, a Democrat from Oregon, Wednesday sent a letter to the Government Accountability Office asking the Congressional oversight body to determine whether IRS directives on payroll count as a tax suspension “rule. “For the purposes of the Congressional Review Act, which Congress can use to repeal rules established by federal agencies.
If deemed a rule by the GAO, it would be given Congress the power to review and repeal the bylaw through a joint resolution (although Republicans control the Senate, it is unlikely that Democratic lawmakers will be able to block the measure).
Under Trump’s August 8 executive order, the 6.2% payroll tax, which is used to fund Social Security, can be deferred for workers who earn less than $ 104,000 annually, or $ 4,000 every two weeks, from September 1 through the end of the year. At this point, employers are obligated to start collecting what they owe.
The measure, which Trump said could provide some financial support for workers and families struggling as a result of the virus-ravaged economy, came amid a deadlock in Congress over another coronavirus relief package. He indicated that he wanted to “end” the tax so that workers would not be required to repay the money at a later time.
“If I win on November 3rd, I plan to waive these taxes and make permanent cuts to the payroll tax,” Trump said. “I will always make them all.”
But canceling the debt requires action from Congress, which is an impossible scenario with the Democrats controlling the House of Representatives.
In the absence of legislation, Treasury guidelines indicate that after January 1, companies will withhold taxes from their paychecks in greater amounts so that employees can pay what they owe, meaning that millions of Americans could see lower salaries in the first few months of 2021.
It is unclear what would happen if employees took windfall gains and then stopped working for their companies before the end of April either because they quit their jobs, were laid off, or on leave. According to the guidelines, companies can “make arrangements to collect the total applicable taxes from the employee.”