Trump's proposed tax cut would eliminate $1T in Social Security revenue: SSA’s chief actuary
The vexing question of how much to raise taxes or cut benefits to preserve Social Security is moving into a perplexing new phase.
President Trump’s suggestion of eliminating payroll taxes that fund benefits would end the program entirely if carried out in legislation, according to the Social Security Administration. Earlier this month, Trump deferred payment of some of the taxes to provide coronavirus relief to workers.
The White House is pushing back against critics, pledging it will ensure Social Security is fully funded — even if Trump’s Aug. 8 executive order deferring the employee taxes through the end of the year is made into a permanent tax cut.
The order is causing confusion, and budget experts warn of what will happen without the tax revenue. For starters, in the absence of guidance from the administration, the extra cash for workers from not collecting the 6.2% tax on employee wages hasn’t reached any of them.
The pandemic was already accelerating the program’s impending insolvency before President Trump said he would be “terminating the payroll tax” if he wins re-election this November. Without any other sources of revenue, disability benefits would end within a year and retiree payments would stop within three, according to Stephen Goss, Social Security’s chief actuary.
Goss was responding to four Democratic senators who asked his office to calculate the effects of ending all of the payroll taxes on workers and employers. If enacted next year, such a plan would eliminate more than $1 trillion, or 90%, of the program’s expected revenue in 2021, Goss wrote in an Aug. 24 letter. He notes that no such hypothetical legislation exists, though.
“Trump’s payroll tax cut plan not only fails to help Americans struggling to get by right now, it would also completely decimate Social Security for the millions of Americans who rely on it,” Sen. Chris Van Hollen of Maryland said in a statement.
It’s not clear, though, just what the administration intends to do. This month, President Trump has vowed at least twice to eliminate the payroll tax. Accountants, large companies and business trade groups are also expressing frustration that they don’t have information from the IRS or the Treasury Department about implementing the deferral, Bloomberg News reported.
“Companies cannot do anything until there is guidance,” Veena Murthy, a principal at the Crowe accounting firm, told the outlet.
The White House didn’t respond to a request for comment.
Trump has an “unwavering commitment to Social Security — making sure that it is fully funded and that our seniors are taken care of,” White House Press Secretary Kayleigh McEnany said in a briefing days after the executive order.
“The president is very clear on this matter that he wants a permanent forgiveness of the deferral,” McEnany said. “That’s as far as he’s gone, and he’s gone even further to say he’s going to make sure that Social Security is fully funded.”