Democrats balk at Trump’s payroll tax cut proposal

House Democrats on Monday night balked at President Trump’s proposed payroll tax cut designed to help shore up the economy amid the coronavirus outbreak.

After the worst day on Wall Street in more than a decade, Trump said he would ask Congress to pass an emergency economic package that includes both a payroll tax cut and relief for hourly workers to fight the economic fallout from the coronavirus.

But Democrats argued that cutting the federal payroll tax would not help people who have lost their jobs in this sudden downturn, or who are part of the gig economy and do not get paid by the hour.

Asked if the payroll tax cut was dead on arrival on Capitol Hill, Rep. Gregory Meeks (D-N.Y.) replied: “I think so.”

“I see folks who are being devastated, who are either losing their jobs temporarily or their hours are being cut, and there is nothing being done to help them get back on their feet,” Meeks said in an interview outside the Capitol.

“We have to figure out where we can get more revenue that can make a difference for them. Payroll taxes — I don’t know if that’s the best way to go,” said Meeks, adding that rolling back the 2017 Trump tax cuts would raise more revenue to help affected workers. 

Rep. Don Beyer (Va.), the top Democrat on the bipartisan Joint Economic Committee, said he’s “very suspicious that more tax cuts are going to do anything concrete.”

And Appropriations Committee Chairwoman Nita Lowey (D-N.Y.), who would have jurisdiction over pieces of any big spending package, called the tax cut a non-starter.

“Democrats are trying to respond to the urgency of the average working people around this country who are worried about how they’re going to feed their families because their business has closed. You look at restaurants, other service industries; so that’s the priority right now,” Lowey said Monday night. 

Lowey noted that a payroll tax cut does nothing to help those who have lost their jobs as a result of the turmoil.

“Right now, if somebody loses their job as a dishwasher, I’m not sure the payroll tax cut will really help them,” she said.

Trump and his economic team will provide more detail about their package on Tuesday. But Speaker Nancy Pelosi (Calif.) and her fellow House Democrats are drafting their own stimulus package to help stave off a coronavirus-related recession during this critical election year.

That Democratic package is unlikely to include a payroll tax cut, which she described as “tax cuts for major corporations.” 

Instead, it is expected to include paid sick leave for workers who need to self-quarantine due to the coronavirus; enhanced unemployment insurance for those who lose their jobs from the economic impact related to the epidemic; and free coronavirus testing to help control its spread.

“We have to be very targeted about making sure we get money into working folks’ hands and, and not general tax cuts that benefit a lot of people, including some that don’t really need to be benefited,” said Rep. Pramila Jayapal (D-Wash.), the Progressive Caucus co-chairwoman. 

“We really need to be very specific about how we address gig workers, people who can’t work from home, people who are sick who don’t have insurance,” Jayapal continued. “We need to be looking at the most vulnerable populations and targeting those folks in terms of any plans that we pass.”

When asked about a payroll tax cut, House Ways and Means Committee Chairman Richard Neal (D-Mass.) reiterated that his desired way to stimulate the economy would be through infrastructure spending.

“We should have done something along the lines of expanding infrastructure six months ago when [Trump] said he was going to do it,” Neal, who leads the powerful tax-writing committee, told reporters Monday evening.