Congress

Payroll tax deferral would become optional under new bill

Federal employees and military servicemembers would have to provide written consent to be included in President Donald Trump’s payroll tax deferral program, under legislation announced Oct. 9 in the Senate.

“President Trump is using federal employees and our troops as pawns in his payroll tax scheme, and it’s unacceptable. During this time of heightened uncertainty, our public servants deserve the ability to choose what makes most sense for them and for their pocketbooks. That’s why the president’s payroll tax deferral must be made optional. Since this move has been described as ‘reasonable’ by President Trump’s own Treasury secretary, I urge the Congress to act quickly on this commonsense measure,” said Sen. Chris Van Hollen, D-Md., a cosponsor of the bill.

The payroll tax deferral is optional for private employers, and most have chosen not to participate, as those taxes that are deferred from 2020 paychecks would still have to be collected in 2021, resulting in employees that take home smaller paychecks than they normally would.

But federal employees and members of the military were automatically enrolled, with some saying they were given very little explanation for how that money would need to be paid back in later months.

“This payroll tax deferral plan is nothing but a temporary loan program and federal employees deserve to choose whether they want to participate,” National Treasury Employees Union National President Tony Reardon said in a statement. “We appreciate Sen. Van Hollen and his growing list of cosponsors for looking out for workers who want to protect themselves from the burdens of higher taxes and smaller paychecks come January.”

Federal employees that make less than $4,000 per pay period — a majority of government workers — have already seen the deferral program applied to their September paychecks.

“The President’s payroll tax deferral scheme is nothing more than a scam on hardworking federal employees — making their paychecks look bigger until the end the of the year when they’ll be hit with a surprise increase in their payroll taxes right after the holidays,” said Everett Kelley, national president of the American Federation of Government Employees, in a statement.

The bill would require federal employees to affirmatively opt-in to the program in writing, rather than automatically assuming that feds want to participate. It currently has 16 cosponsors in the Senate, all Democrats.

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