With billions of dollars of Social Security benefits flowing into Florida yearly, seniors should be concerned about a presidential order to suspend payroll taxes that fund both social security and medicare.
Dave Bruns, a spokesman for AARP Florida, said he has taken many calls in the last two days from seniors worried about the long-term viability of Social Security if President Donald Trump suspends payroll taxes for now, but then eliminates them, as he has long advocated.
“This is critical for Florida,” Bruns said. “It’s a very serious concern for older people. They know perfectly well what funds Social Security and that cutting the payroll tax is a threat to their livelihood.” He estimates that Florida is home to 4 million senior citizens who draw $7 billion worth of Social Security benefits. “We have long-term concerns, deep concerns about changing the mechanism of funding Social Security,” Bruns said. “About 20 percent of seniors in Florida age 65 and older rely on Social Security for 90 percent or more of their total income.”
The Federal Payroll tax is currently 7.65 percent: 6.2 percent for Social Security and 1.45 percent for Medicare. The 7.65 percent is deducted from the employee’s wages and then matched by the employer.
After negotiations in Congress on a coronavirus relief package stalled, Trump signed directives including a payroll tax holiday for Americans earning less than $100,000 per year, according to a White House briefing this past Saturday. The measure involves allowing employers to defer payment of the employee portion of certain payroll taxes. It wasn’t clear if Medicare taxes would be included as well. One of President Trump’s August 8, 2020, executive orders deferred payroll taxes for Americans earning less than $100,000 per year ($8,000 a month) from September 1 until December 31, but the taxes will have to be paid next year.
“This will mean bigger paychecks for working families,” Trump said at the briefing. He also added, “If I’m victorious on November 3rd, I plan to forgive these taxes and make permanent cuts to the payroll tax.” However, Trump may need Congressional approval to do that if he is re-elected.
A preliminary estimate by the Committee for a Responsible Federal Budget based in Washington, D.C., puts the cost of the payroll tax holiday for employees at $100 billion through the end of this year, with repayment due in 2021. Putting more money temporarily into employee paychecks can be helpful, but even Republicans are concerned about how the payroll tax issue will play out.
Iowa Republican Chuck Grassley, chair of the U.S. Senate Committee on Finance, says he doesn’t support the payroll tax cut unless provisions are made to protect Social Security, according to an account from The Hill.
But if Trump wants to “terminate” the payroll tax on employees and employers altogether, Grassley indicated that would require a broader reform effort to find other means of funding Social Security, according to The Hill.
Trump’s directives not only defer payroll taxes but also extend supplemental unemployment benefits of $400 weekly for jobless workers. However, states will need to contribute $100 per week of that amount. That amount would be in addition to regular Florida unemployment benefits of $275 weekly, which have been extended by 13 weeks. The Florida Department of Economic Opportunity’s last report in June said more than 1 million Floridians were out of work.
Gov. Ron DeSantis said Tuesday (August 11, 2020) at a news conference that federal CARE Act dollars allocated to Florida could not be used to add the $100 weekly to a supplemental unemployment benefit because those dollars are already obligated. DeSantis said the better option may be to take a loan from the U.S. Department of Labor to bolster the state’s unemployment funds.
Rich Templin, executive director of the AFL-CIO of Florida, said Trump’s executive order on unemployment benefits is a false promise and “adds insult to injury” for working people struggling to stay afloat after losing their jobs through no fault of their own. He said Florida’s bungled handling of unemployment claims is a glaring example of how difficult it is for states to administer any but the simplest of unemployment schemes.
Templin said, “The U.S. Senate needs to do its job and come up with a solution that is rooted in good public policy.” He said the $3.4 trillion HEROES Act passed by the Democrat-led U.S. House of Representatives in May is a better solution for workers and employers, even after the $1 trillion reduction offered by the House to the Senate in order to reach a compromise. The GOP-run Senate’s HEALS proposal costs $1 trillion; the Trump administration has refused to budge from this aid amount.