A handful of major employers in the United States including CVS Health Corp.(NYSE: CVS), Home Depot Inc (NYSE: HD), Wells Fargo & Co. (NYSE: WFC) among others, reportedly rejected President Donald Trump’s payroll-tax deferral plan, which would leave employee checks as is for the remainder of the year.
President Trump’s payroll-tax deferral plan allows employers to temporarily waive the 6.2% Social Security tax until next year when repayment will be made in early 2021. Trump’s plan aims to take the pressure off of American workers currently suffering under the economic devastation of the COVID-19 pandemic.
In addition to the aforementioned firms, other large employers have opted out of the Trump payroll-tax deferral plan which is seemingly struggling to find footing in the private sector of the U.S. economy. The companies include Costco Wholesale Corporation (NASDAQ: COST) and even JP Morgan Chase & Co. (NYSE: JPM).
The payroll-tax deferral plan will be available until Dec. 31, 2020 to employers and employees making under $104,000 per annum,. An employee making $80,000 per year could defer roughly $1,653 until next year.
Federal executive-branch employees and military personnel under the Trump administration will be taking advantage of the deferral. Therefore, federal employees’ paychecks are expected to shrink by the start of 2021 to pay what was deferred in 2020.
Payroll-tax defferal is “not in the best interest” of employees
Michael DeAngelis, a spokesman for CVS Health said, “We have reviewed the guidance issued by the U.S. Treasury Department and the IRS and have determined that participating in this optional deferral program is not in our employees’ best interest.”
While any company can participate in the Trump plan, the list of companies actually taking advantage of the program is rather scant. Furthermore, there is no guarantee that Trump’s program will hold water with Congress, which ultimately has to approve the deferment.
In fact, the U.S. House of Representatives will not implement the payroll-tax deferral program.
The House Chief Administrative Officer Philip Kiko sent an e-mail to the lower chamber’s employees indicating that his office and the Committee on House Administration “reviewed the guidance” related to the implementation of the payroll-tax deferral program. They also “considered the unique structure of the House and has determined that implementing the deferral would not be in the best interests of the House or our employees.”
Currently, the Congress is debating on a second coronavirus relief package. Republicans and Democrats are at a standstill over various elements of the package including aid to states and the overall price tag. Whether Trump’s program will be included as part of the package remains to be seen.
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