A Payroll Tax Holiday is No Free Lunch

Forgiving payroll taxes is a bad way of stimulating the economy and would leave Social Security benefits underfunded.

by Veronique de Rugy

A few weeks ago, President Donald Trump proposed a payroll tax holiday to Americans earning less than $100,000 per year. The gesture is better described as a deferral of the payroll tax burden until April 2021. That has some people worried, and they should be.

Talking about his plan, the president explained, “In a few moments, I will sign a directive, instructing the Treasury Department to allow employers to defer payment of the employee portion of certain payroll taxes from Sept. 1.” The deferral will last until the end of 2021. As the president added, “This will mean bigger paychecks for working families.”

An actual payroll tax holiday does mean an increase in take-home wages for some.

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