Washington Post economics columnist Catherine Rampell on Monday said that President Donald Trump’s executive orders intended to provide economic relief to Americans during the COVID-19 pandemic have the potential to make things much worse.
In particular, Rampell argued that the president’s order to temporarily suspend payroll taxes with no guarantee of permanent relief will be a massive headache for businesses to navigate.
“This is going to be a nightmare,” she said. “Remember, this is a payroll tax deferral, not a tax cut. That means that these taxes will ultimately need to be paid after 2020. And the real question is, who’s left holding the bag?”
She said that it would be particularly difficult for businesses to decide whether they should withhold taxes from employee paychecks, as there’s no guarantee that Congress will pass legislation forgiving them from having to pay back taxes when the payroll tax holiday ends.
“The alternatives are, employees will have to pay these tax bills that they were not anticipating some time next year when we may well still be in the middle of some kind of economic recession,” she said. “This is money they haven’t budgeted for or has been withheld from their paychecks. But most likely, based on the tax attorneys that I’ve consulted, what will happen is employers, their bosses will have to make good on those taxes.”
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