Federal workers will have taxes deferred under Trump’s order, sparking outcry

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PaulinVA

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https://www.washingtonpost.com/us-p...top-stories_fed-taxes-410p:homepage/story-ans
The U.S. government will implement an across-the-board payroll tax deferral for about 1.3 million federal employees starting in mid-September, potentially forcing these workers to take a temporary financial boost now that they will have to repay next year.

The policy, confirmed Monday by a senior administration official, comes in response to a widely panned policy directive issued by President Trump earlier in August. Unions have sharply criticized the government’s decision, fearing federal workers may not have a choice in whether to take the deferral — resulting in them receiving smaller paychecks in 2021 until the past-due taxes are paid off.

Trump’s order specifically targets the 6.2 percent tax that employers deduct from their workers’ wages so the government can fund Social Security. His directive postpones payment of those taxes until January, at which point employers are required to start collecting back what is owed, perhaps by withholding double the amount they usually take until May. The deferral applies only to people who earn up to $4,000 on a biweekly basis, and less than $104,000 annually.
 
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PaulinVA said:
The policy, confirmed Monday by a senior administration official, comes in response to a widely panned policy directive issued by President Trump earlier in August. Unions have sharply criticized the government’s decision, fearing federal workers may not have a choice in whether to take the deferral — resulting in them receiving smaller paychecks in 2021 until the past-due taxes are paid off.
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Umm, put the extra money into an interest earning investment. Then, they will have more money next year, not less.
 
JonNC said:
Umm, put the extra money into an interest earning investment. Then, they will have more money next year, not less.
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LOL. The savings interest rate in Trump’s America would yield a few cents a month at the most.
 
PaulinVA said:
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JonNC:
Umm, put the extra money into an interest earning investment. Then, they will have more money next year, not less.
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LOL. The savings interest rate in Trump’s America would yield a few cents a month at the most.
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That goes back before Trump, but my investments have done very well these last 3 -4 years. Either way, just put the money aside.
 
JonNC said:
That goes back before Trump, but my investments have done very well these last 3 -4 years. Either way, just put the money aside.
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You just shouldn’t have to. There was no reason for Trump to do this.

It doesn’t apply to me, but, whatever.
 
PaulinVA said:
You just shouldn’t have to. There was no reason for Trump to do this.

It doesn’t apply to me, but, whatever.
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Its a nightmare, really. Most employers are simply refusing to do it. There is no guidance from the government on how to handle the “program.” For example, what do you do if an employee loses his job in December? Do you take all the deferred taxes out of his last paycheck? Does he owe it in his tax return? Does the employer have to pay it and try to get it back from him somehow? What if someone has two jobs which, combined, move him over the threshold? How would the employer even know? Employers are asking these questions and the IRS has no answers for them.

And the best question, how does this actual help? It does nothing for the unemployed, who don’t pay payroll taxes, and nothing for the employed, who have to pay it back in a few months. What does it really do for anybody?
 
PaulinVA said:
You just shouldn’t have to. There was no reason for Trump to do this.
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You shouldn’t have to be able to keep more of your own money longer? Really? Why not?
I think they should make withholding optional. Why should the government have access to my money throughout the year when taxes are due April 15th? Even if I only made $100 in interest, it would be an actual return on investment of my money.
I’m always amazed when people celebrate a big tax refund. They should be outraged. The government got to use / borrow their money without interest. And that’s something to celebrate?
PaulinVA said:
It doesn’t apply to me, but, whatever.
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It doesn’t apply to me, either, but I wish it did.
 
I am hoping we do not take part. However, if we do, I will simply move the amount over to savings every paycheck. I will not use it to stimulate the economy. That would be stupid. This sort of program reminds me of raising money through the lottery. It hurts those bad at math.

It has got to be one of the dumbest ideas I have ever seen, and it does little to commend the current president as a “genius.”
 
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JonNC said:
I think they should make withholding optional. Why should the government have access to my money throughout the year when taxes are due April 15th?
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How do you think the government is funded throughout the year?
 
PaulinVA said:
How do you think the government is funded throughout the year?
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How are they doing it now? Maybe if everyone had to pay it all at once people would balk at spending and taxes.

Here’s an idea. They collect taxes April 15, spend that money on a budget until the next April 15
 
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JonNC said:
Here’s an idea. They collect taxes April 15, spend that money on a budget until the next April 15
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Jon, do you seriously think people would save the money? 40% of Americans can’t even come up with $400 for an emergency.

I think it would be a grave disservice to most workers. I agree in principal with you, but in practice it wouldn’t work.
 
PaulinVA said:
Jon, do you seriously think people would save the money? 40% of Americans can’t even come up with $400 for an emergency.
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What is the difference between saving it and government taking off the top of the paycheck?
PaulinVA said:
I think it would be a grave disservice to most workers. I agree in principal with you, but in practice it wouldn’t work.
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Then require people to save it. Or just give a free people the choice.

BTW, I’m glad you agree in principle. 👍
 
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JonNC said:
What is the difference between saving it and government taking off the top of the paycheck?
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I think most people would spend it and not have it when it came time to pay the taxes. 6.2% (SS and medicare) of the average wage, 56,516, is $3500 in a year. I think for a lot of people the immediate would overrule the eventual.
JonNC said:
Then require people to save it. Or just give a free people the choice.
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It would be a record keeping nightmare, but in principal I wouldn’t object. Of course, your taxes in general, federal income tax not ss/medicare, would go up to make up the interest for increased borrowing throughout the year.
JonNC said:
BTW, I’m glad you agree in principle. 👍
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Always nice to agree.
 
PaulinVA said:
I think most people would spend it and not have it when it came time to pay the taxes. 6.2% (SS and medicare) of the average wage, 56,516, is $3500 in a year. I think for a lot of people the immediate would overrule the eventual.
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A free people. If not, just require it be saved.
And it is double 6.2%.
PaulinVA said:
It would be a record keeping nightmare, but in principal I wouldn’t object. Of course, your taxes in general, federal income tax not ss/medicare, would go up to make up the interest for increased borrowing throughout the year.
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Cut spending so more money need not be borrowed.

Better idea: eliminate income taxes, including payroll tax, and go to the Fair Tax
PaulinVA said:
Always nice to agree.
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Yep
 
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pnewton said:
it does little to commend the current president as a “genius.”
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It will make it look like his successor whether him or Biden, is raising taxes come January. May be difficult to reinstate the original tax at that point.
 
JonNC said:
And it is double 6.2%.
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The individual is only responsible for the employee 6.2%, right?

I guess if your talking about self-employed, then, yes, but in that case it’s quarterly estimated payments.
JonNC said:
Better idea: eliminate income taxes, including payroll tax, and go to the Fair Tax
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Isn’t that regressive? I don’t think that’s fair.
 
The abandonment of fiscal conservatism is one of the greatest losses of the current Republican Party. The idea of not having any income tax is something I would have never thought I would see a Republican president pull. Yet this one wants to stop tax withholding? This is like government by Ponzi con artists.
 
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