Even the federal government needed some time to recalibrate. It said it wouldn’t stop withholding the taxes until mid-September, about two weeks after the start date for the deferral period.
A Treasury Department spokesperson declined to comment on the take-up of the initiative.
Trump’s August directive delayed the payroll tax due date for the 6.2% Social Security taxes for those making less than $4,000 bi-weekly, which amounts to about $104,000 a year. It was his latest attempt to achieve a second tax reduction after criticism that the 2017 Republican tax overhaul didn’t do enough to help middle class workers.
Lawmakers did endorse a deferral of the portion of payroll taxes that’s paid by companies -- not employees -- and it was part of the last stimulus package, approved in March. That measure was easier for employers to administer, and acted as a temporary liquidity aid.
On Twitter Thursday, Trump reiterated his pledge to seek the cancellation of the deferred payroll tax should he win reelection.
He can’t do that without the approval of Congress, and he has repeatedly asked lawmakers to cut payroll taxes. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, plans to introduce legislation forgiving the deferred levies under the Trump order through year-end.
Yet both Republican and Democratic leaders have rejected permanent cuts to the tax, because it could compromise the long-term solvency of Social Security retirement benefits.
The temporary deferral means that even if companies embrace the Trump action more broadly, the impact on spending may be limited.
“People are not super sensitive to small changes in their paychecks,” said Mattie Duppler, the president of consulting firm Forward Strategies. “But doubling the payroll tax when executive order expires will certainly be noticed by employees.”
--With assistance from Saleha Mohsin, Nic Querolo, Jordyn Holman, Gerald Porter Jr. and Colin Wilhelm.
This article was provided by Bloomberg News.