Please consider contacting your representatives concerning possible cuts to payroll taxes which could affect your Social Security benefits, including disability, both current (and future) as contained in the Presidential Memorandum of August 8, 2020.
The League of Women Voters of the United States believes that the federal government has a role in funding Social Security and Medicare. Federal deficit reduction, whether brought on by emergency federal monies spent due to the Covid-19 pandemic or not, should not be achieved by deferring payroll taxes. The Trust Act about which we emailed you on August 4, 2020, has evidently been tabled and replaced with another policy.
On August 8, 2020, a Presidential Memorandum was issued directing the Secretary of the Treasury to use his authority pursuant to section 7508A of the Internal Revenue Code "to defer the withholding, deposit, and payment of certain payroll tax obligations. Accordingly, the Secretary has determined that employers that are required to withhold and pay the employee share of social security tax under section 3102 (a) are affected by the Covid-19 emergency for purposes of relief described in the Presidential Memorandum.” These payroll taxes are to be deferred from September 4 through December 31, 2020. However, the applicable taxes are only postponed until the period beginning on January 1, 2021, and ending on April 30, 2021 at which time the employee is obliged to pay them back.
The Presidential Memorandum is available at https://www.federalregister.gov/d2020-17899
In other words, under the guise of coronavirus relief, private sector businesses have the option to stop withholding their employees’ payroll taxes until the end of the year. But if they participate, they’ll have to withhold twice as much from paychecks next year to make up for it. The idea has proven to be so problematic that few businesses have expressed any interest in carrying out the presidential order. Lawmakers, tax experts, business leaders, and payroll-processing companies have raised concerns about its implementation, raising the potential that this bid to boost worker’s paychecks will result in little economic gain. However, the payroll tax has been deferred across-the-board for about 1.3 million federal employees and uniformed service members.
The unilateral, unprecedented step of deferring the collection of payroll taxes, the backbone of Social Security, is seen as the first step in ending completely the Social Security Old-Age and Survivors benefits into which most Americans have paid their entire working lives or into which the majority of working Americans are paying now. Pursuant to section 7508A of the Internal Revenue Code, the President may issue deferrals for up to one year when a disaster is declared. This would be long enough to end the Social Security Disability Insurance benefits by the middle of 2021. No Congressional involvement is neeed to continue deferring those taxes as long as an emergency declaration is in place or is renewed. Every single Social Security benefit could be stopped by the end of two more such disaster declarations, i.e., by the end of 2023.
The chief actuary of the Social Security Administration, Stephen Goss, sent a letter to Congress explaining, “…that with no alternative source of revenue to replace the elimination of payroll taxes on earned income paid on January 1, 2021 and thereafter, we estimate that the Disability Insurance Trust Fund asset reserves would be permanently depleted by the middle of calendar year 2021… with no ability to pay DI benefits thereafter.” Further he said, “We estimate that the Old Age and Survivors Insurance Trust Fund reserves would become permanently depleted by the middle of calendar year 2023…” especially as the maximum earnings subject to payroll taxes is $137,700.
All this can be accomplished unilaterally - without a single vote in Congress.
