Top Senators urged the Trump administration on Tuesday to halt its plans to implement a mandatory payroll tax deferral for millions of federal employees, arguing that these workers should not be treated as political “pawns.”
The issue stems from an order issued by President Trump in August, which allows participating employers to cease withholding their workers’ payroll taxes until the end of the year. Private-sector employees may be able to opt out of the plan, but federal workers do not appear to have a choice — meaning they will see a slight boost to their pay now, then owe more in 2021.
The forced nature of the president’s order drew frustration from about two dozen lawmakers led by Sen. Chris Van Hollen (D-Md.), who called it a “payroll tax scheme” and demanded answers in a sharply critical letter sent to the Treasury Department and the Office of Management and Budget, which are overseeing the deferral’s implementation.
“We urge you to let federal workers and uniformed service members choose whether to defer their payroll tax obligations … rather than forcing them to participate,” Van Hollen wrote, along with Sens. Susan Collins (R-Maine), Charles E. Schumer (D-N.Y.), Bernie Sanders (I-Vt.) and 19 other lawmakers, all of whom are Democrats.
“While some federal employees may want to defer their payroll tax payments,” the lawmakers continued, “unions representing federal workers have made clear that many others do not.”
Spokespeople for the two federal agencies did not immediately respond to a request for comment.
The bipartisan rebuke is only the latest against Trump’s payroll tax order, one of a series of actions he announced in August to circumvent a congressional stalemate over another round of coronavirus aid. In signing the directive, Trump promised he would boost workers’ take-home pay and pledged he would “terminate” the taxes Americans accrue over the next four months so that they don’t have to repay them in January.
Weeks later, however, the president’s vision appears to be in tatters. A wide swath of companies have signaled they may not implement Trump’s order, threatening to undermine the White House’s attempts to stimulate the economy. Trump’s aim to absolve Americans’ tax debts, meanwhile, has garnered little meaningful support among the lawmakers who would have to approve such a law.
In the meantime, the federal government has forged ahead with its own plans to implement the president’s deferral for millions of federal workers. Official guidance sent to these employees in recent days has indicated they are unable to opt out of the program.
The approach has drawn opposition from unions, one of which urged Congress this month to block the government from imposing Trump’s order as part of its next bill funding federal operations. Democratic lawmakers are “planning to pursue that in any continuing resolution,” Van Hollen said in an interview Tuesday.
The Defense Department’s military and civilian employees are subject to the deferral, a payroll processor for the Pentagon confirmed over the weekend. In doing so, it specified in bold, italicized, underlined guidance posted online that they are “not eligible to opt out of the deferral.”
Lawmakers, including Van Hollen, said Trump had sought to “sow mass confusion” about a tax deferral that eventually must be repaid. “The president wants them to believe they got this bonus,” he said.