[Vision2020] Fwd: Payroll taxes

[Ron Force]

It's even worse if you look at tax law, as Catherine Rampell has done.
Here's an excerpt from her Washington Post column:
https://www.washingtonpost.com/opinions/trumps-inadvertent-tax-hike/2020/08/10/12457502-db00-11ea-809e-b8be57ba616e_story.html?hpid=hp_save-opinions-float-right-4-0_opinion-card-c-right%3Ahomepage%2Fstory-ans

Scenario #1: Congress opts for a tax jubilee, forgiving these delayed
payroll taxes altogether and converting Trump’s tax deferral into an
outright tax cut. Trump is clearly hoping
<https://www.washingtonpost.com/us-policy/2020/08/08/trump-payroll-tax-cut/?hpid=hp_hp-banner-main_trumporders231pm%3Ahomepage%2Fstory-ans&itid=lk_inline_manual_12>
for
this.
These payroll taxes fund Social Security, though, and a massive payroll tax
cut would cause the program’s trust fund to go broke faster than already
expected <https://www.ssa.gov/oact/trsum/>. Shortchanging the entitlement
system would be extremely controversial. It’s unlikely that lawmakers would
suddenly agree to a policy that would provide fodder for endless attack
ads. After all, Congress is not exactly great at coming together to pass
controversial, divisive legislation; if lawmakers were, presumably Trump
wouldn’t be attempting coronavirus
<https://www.washingtonpost.com/health/2020/02/28/what-you-need-know-about-coronavirus/?itid=lk_inline_manual_14>
 relief via executive fiat.

Scenario #2: Congress does nothing, and employees still have to pay all
these deferred taxes when filing their income tax returns next year. That
is, a huge, unexpected bill will come due around April 15.

This would be a bill families likely didn’t budget for, since these taxes
usually are withheld from paychecks; many may be expecting refunds that
they’d already mentally earmarked
<https://www.investopedia.com/terms/m/mentalaccounting.asp> for rent or a
big purchase. Asking Americans to suddenly pay hundreds or thousands of
dollars they hadn’t anticipated would amount to a huge fiscal contraction
when the economy may well still be in recession.

Realistically, though, a lot of households may never realize that they’re
supposed to pay these deferred taxes because standard tax prep software —
at least as currently programmed — probably wouldn’t tell them if they had
been under-withheld on payroll taxes.And under U.S. tax law, their
*employers *would then become liable for the deferred employee-share of
payroll taxes that were never paid...

This brings us to Scenario #3: Employers — including cash-strapped small
businesses — are left holding the bag. And at this point, the tax bill
could actually get bigger. Here’s why:

Come 2021, if and when employers pay the IRS for the payroll tax debts
their employees never paid, under U.S. tax law such payments would be
treated as *income *to each affected employee. Because the payments for
employees’ unpaid taxes now get treated as employee income, employers would
have to remit *additional *income and payroll taxes — essentially, they
have to pay taxes on taxes <https://knowyourmeme.com/memes/xzibit-yo-dawg>,
bizarre as it may sound. (Accountants refer to this as “grossing up.”)
Employers can try to recoup the cost of these additional expenses from
their employees . . . but good luck if those employees have already moved
on to other jobs.

Of course, employers with decent accountants or tax attorneys might
discover this potentially enormous new tax exposure before they revamp
their entire paycheck withholding process. Tax advisers would probably tell
them to just ignore the Trump memorandum, not defer employee-side payroll
taxes and conduct business as usual.

This means the best-case scenario is: nothing happens. Which sounds like
the prayer Americans mutter every time Trump attempts a half-baked policy
like this one.

Ron Force

Moscow Idaho USA


On Mon, Aug 10, 2020 at 2:14 PM Roger Hayes <rhayesmoscowid at gmail.com>
wrote:

>
>
> ---------- Forwarded message ---------
> From: Roger Hayes <rhayesmoscowid at gmail.com>
> Date: Mon, Aug 10, 2020 at 2:12 PM
> Subject: Payroll taxes
> To: spudnet <spudnet at johnblack.com>
>
>
> Here's the rub on the Orange Ass's Saturday executive orders on SSI and
> Medicare.
>
> -Defer the payments to SSI and Medicare. If you elect me, I'll make these
> deferments permanent. If you don't, you'll have to pay all that money back.
> It's just old, poor, middle class people anyway. Who gives a damn about
> them, even though they've paid into these programs for a work lifetime.
> - Send a bit of money to unemployed people, but not enough to sustain
> them. Drive desperate people, who might not be able to make rent,
> mortgages, car payments and so forth, back to work in unsafe conditions.
> The employers see that desperation and cut wages. The employers can claim,
> hey, it's not so bad, your paychecks will nearly be the same due to the
> payroll deferment for SSI and Medicare.
>
> I have to admit, that while I continue to think that ass is a moron, he
> sure knows how to hire con men. Mnechen and company.
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