President Trump said over the weekend, “If I’m victorious on November 3rd, I plan to forgive these [payroll
taxes for Social Security] and make permanent cuts to the
payroll tax.”
Currently, employers and employees split the 12.4{e60f258f32f4d0090826105a8a8e4487cca35cebb3251bd7e4de0ff6f7e40497} payroll tax on the first $137,700 of 2020 earnings and also split the 2.9{e60f258f32f4d0090826105a8a8e4487cca35cebb3251bd7e4de0ff6f7e40497} Medicare tax on all earnings. The self-employed pay the entire tax.
Trump not only wants to suspend the Social Security tax during the pandemic crisis, he says he wants to make permanent cuts to the tax.
First, the only people who pay these taxes are people who still have their jobs and their earnings. With millions unemployed it can be argued that it would make more sense to increase deficit spending by providing help directly to those who don’t have any earnings––the unemployed.
But the bigger question revolves around the suspension of funding to Social Security––particularly permanent cuts.
Both the Medicare and Social Security trust funds are running out of money––both face an inability to pay full benefits if their problems aren’t solved by either increasing funding or cutting benefits. That is projected by the Congressional Budget Office to happen for Medicare in 2025 and Social Security in 2031.
