In a Sunday op-ed in The Wall Street Journal, Stephen Moore, a member of the White House’s economic recovery task force, called for President Trump to “pull an end run” around Congress, declare a national economic emergency and suspend the collection of payroll taxes. Trump has repeatedly pushed for a payroll tax cut, but the idea ran into bipartisan resistance on Capitol Hill and the cut was not part of the Senate Republican coronavirus relief plan released last week. Some analysts have said that such a cut would not help workers who have lost their jobs.
Moore and co-author Phil Kerpen argue that the deferral of payroll tax collections would leave workers on the hook to pay those taxes down the line, but that “Trump could also pledge to sign a bill—now or after the new Congress takes office on Jan. 3—to forgive those repayments. That would make the election a referendum on middle-class taxes. Mr. Trump can give Americans a tax cut now, and sign it into law later.” They suggest that Trump could cap the tax deferral at $75,000 of income to target the benefits to lower- and middle-income workers.
But tax experts told Politico that the proposal from Moore and Kerpen, even if it is legal, might not play out the way the authors suggest. The Treasury Department may not be able to mandate that businesses actually pass the deferred tax money on to employees. “Cautious employers will continue to withhold payroll taxes from their employees’ paychecks because if the subsequent tax forgiveness bill does not go through, employers face potential liability for the full amount of payroll taxes (even their employees’ portion),” Andy Grewal, a University of Iowa law professor, told Politico in an email. “What the authors want requires legislative attention.”