Help Me Understand Trump's Payroll Tax Cut

[trey4sports]

From my understanding President Trump's Executive Order will defer the Payroll Tax for Income earners making less than $100K annually (or $4,000 bi-weekly)

Does that mean if someone earns more than $100K (or $4,000 bi-weekly) that they will not get the payroll tax deferment? Or will they get deferment up to the first $100K (annualized) and then pay payroll taxes on wages over that portion?

I.E. Someone earns $5,000 on a bi-weekly pay check and doesn't pay payroll tax on the first $4,000 of income but they do pay payroll tax on the last $1,000 of income

or

Someone earns $5,000 bi-weekly and they pay payroll tax on all $5,000 just as they normally would


I have read a couple of press releases and news articles but unfortunately no one really makes this clarification so any help interpreting the EO would be greatly appreciated.

 

[Daveforliberty]

I don't think anyone knows details yet. Additional questions: If it's $100k for a single person, is it $200k for married filing jointly? Is it adjusted gross income? Is it income tax only, or does it include Social Security and Medicare? If a person is self-employed, does it include the employers portion of the payroll tax?

 

[oyarde]

I don't think anyone knows details yet. Additional questions: If it's $100k for a single person, is it $200k for married filing jointly? Is it adjusted gross income? Is it income tax only, or does it include Social Security and Medicare? If a person is self-employed, does it include the employers portion of the payroll tax?

I think it does mean to not collect social security and medicaid as well because he wanted that in his stimulus bill but the senate GOP establishment opposed it

 

[Brian4Liberty]

From my understanding President Trump's Executive Order will defer the Payroll Tax for Income earners making less than $100K annually (or $4,000 bi-weekly)

Does that mean if someone earns more than $100K (or $4,000 bi-weekly) that they will not get the payroll tax deferment? Or will they get deferment up to the first $100K (annualized) and then pay payroll taxes on wages over that portion?

I.E. Someone earns $5,000 on a bi-weekly pay check and doesn't pay payroll tax on the first $4,000 of income but they do pay payroll tax on the last $1,000 of income

or

Someone earns $5,000 bi-weekly and they pay payroll tax on all $5,000 just as they normally would


I have read a couple of press releases and news articles but unfortunately no one really makes this clarification so any help interpreting the EO would be greatly appreciated.

Good question. First question I had too. Didn't look into it though.

 

[Daveforliberty]

I see where I misunderstood the payroll tax cut completely. Only the 7.45% for Social Security and Medicare. Only for single earners who make less than $4000 bi-weekly.

But, what about the self-employed? And does being married matter at all?

 

[Working Poor]

I think Payroll tax is a tax that business pays for having a payroll. I think it is supposed to be a break for business.

 

[devil21]

From what I've gathered, most businesses that collect and remit those taxes are generally going to continue to do it, as the complications/questions that the OP brings up are just too unclear to risk doing something incorrectly, at least until there is much more clarity.

And stop calling it a tax cut FFS. It's a tax deferral, not a cut. You aren't on the hook for repayment of a tax cut and only Congress can make changes to title 26. The statutory authority referenced in the EO is only for a tax deferral in an emergency. As of now, it will have to be paid at some point.

 

[shakey1]

Maybe just do away with income tax instead?

 

[eleganz]

Maybe just do away with income tax instead?

Sorry, thats not popular around here anymore, at least not through executive order. Anti-statists much prefer the state legislatively tell them that they can keep more of their own money, because its more legitimate.

 

[Swordsmyth]

Sorry, thats not popular around here anymore, at least not through executive order. Anti-statists much prefer the state legislatively tell them that they can keep more of their own money, because its more legitimate.

Enforcing unconstitutional laws is more constitutional than not enforcing them, didn't you know?

 

[dean.engelhardt]

I heard on the news this morning the payroll tax is deferred. If Trump wins reelection, the tax is forgiven. If Trump loses the election, people have to pay the back taxes. Did anyone else hear that? I feel like I'm being extorted with my own money.

To be safe, folks better be saving a sum to give back to the government in the next 3-8 months. We all have an idea how quickly penalties and interest grow when you can't pay the tax bill.

 

[PAF]

I heard on the news this morning the payroll tax is deferred. If Trump wins reelection, the tax is forgiven. If Trump loses the election, people have to pay the back taxes. Did anyone else hear that? I feel like I'm being extorted with my own money.

To be safe, folks better be saving a sum to give back to the government in the next 3-8 months. We all have an idea how quickly penalties and interest grow when you can't pay the tax bill.

Extortion. Only the stupid, and profiteers, buy into it.

 

[dean.engelhardt]

Extortion. Only the stupid, and profiteers, buy into it.

Buy into it? Taxes are taken by force. The IRS doesn't care if anyone buys into it. They take it. If you resist, they take it and put you in jail.

 

[devil21]

I heard on the news this morning the payroll tax is deferred. If Trump wins reelection, the tax is forgiven. If Trump loses the election, people have to pay the back taxes. Did anyone else hear that? I feel like I'm being extorted with my own money.

To be safe, folks better be saving a sum to give back to the government in the next 3-8 months. We all have an idea how quickly penalties and interest grow when you can't pay the tax bill.

Don the Con spent all of his formative years around NYC mobsters. Ya think maybe he picked up a trick or two?

 

[Todd]

President Trump issued a new executive order on August 8 directing the Treasury Department to defer the 6.2% Social Security tax on wages for employees making less than about $100,000 a year. The suspension on collections lasts from Sept. 1 through Dec. 31.

Unfortunately, the suspension on collections—which applies only to the employee share of payroll taxes—doesn't amount to an actual tax cut since collections could resume at any time after December 31. Moreover, once the September-December deferment period is up, employees would still be on the hook for paying their tax liability back to September 1.

https://mises.org/wire/trumps-payroll-tax-order-reminder-every-wage-earner-pays-income-taxes