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Mnuchin Says Payroll Tax Deferral Won't Hit Social Security

By Stephen Cooper · September 1, 2020, 8:34 PM EDT

The White House will solicit congressional approval so that its payroll tax deferral plans don't harm the solvency of the Social Security program, Treasury Secretary Steven Mnuchin told a House panel Tuesday.

Mnuchin, testifying before a special House subcommittee on the pandemic crisis, said the four-month payroll tax deferral, which took effect Sept. 1, is an "important and meaningful" way to provide money for American workers facing the economic impact from COVID-19, the respiratory illness caused by the novel coronavirus. Mnuchin assured Rep. Bill Foster, D-Ill., that the deferral will be paid back, rejecting assertions that the Social Security program would bear the brunt from lower payroll tax collections.

Mnuchin said that President Donald Trump planned to request authorization from Congress for the tax deferral.

"If we pass legislation, then in the legislation this would come out of the general fund and make Social Security 100% whole," Mnuchin said. "We have no intention of having this costing one penny out of the Social Security trust fund."

Foster expressed doubt about Mnuchin's claim, given Trump's various remarks on how the tax deferral would be paid for since he announced it in early August.

"Well, that's interesting," Foster said, promising to compare that  "with some of the statements that your boss has made."

During an Aug. 8 news briefing announcing an executive action to defer payroll tax obligations, Trump said that if he wins reelection in November, he plans "to forgive these taxes and make permanent cuts to the payroll tax."  At the same briefing, just before signing the memorandum, Trump said, "So this is your payroll tax obligations, which we're going to end up terminating eventually, right?"

Trump's notice allowed for the deferral of withholding, deposit and payment of the 6.2% payroll tax for Social Security from Sept. 1 through December. It applied to the levy on workers earning less than $4,000 biweekly, or $104,000 annually.

However, White House press secretary Kayleigh McEnany said during an Aug. 13 news briefing that Trump wants a permanent forgiveness of the deferral and that he would make sure that Social Security is fully funded.

In an IRS notice Friday, the agency said employee payroll taxes deferred under the executive order are due by the end of April 2021, and employers can be hit with interest and penalties if the taxes aren't paid on time. The IRS said employers should withhold the delayed taxes from paychecks sent out Jan. 1 through April 30.

--Additional reporting by David van den Berg, Amy Lee Rosen and Joshua Rosenberg. Editing by Neil Cohen.

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