Conservatives urge Trump to take unilateral action to suspend payroll tax collection

Stephen Moore, a member of the White House’s economic recovery task force, is urging President Trump to direct the IRS to suspend collecting payroll taxes, arguing that doing so would help the middle class and benefit the president politically.

“He should declare a national economic emergency and announce that the Internal Revenue Service will immediately stop collecting the payroll tax,” Moore, along with Phil Kerpen, wrote in an op-ed Sunday in The Wall Street Journal. Moore is a co-founder of the conservative Committee to Unleash Prosperity, and Kerpen is the group’s president.

Trump has repeatedly called for a payroll tax cut as the U.S. economy struggles under the coronavirus pandemic, but the idea has been rejected by congressional leaders on both sides of the aisle.

During an interview on Fox Business Network on Monday, Moore said that the White House is considering the idea discussed in the op-ed.

“What I basically laid out in my Wall Street Journal piece today is that Donald Trump does not need to negotiate with [Speaker] Nancy Pelosi [D-Calif.], and this is something the White House is really looking at,” he said.

The op-ed comes as the White House and Congress are struggling in their negotiations on the next COVID-19 relief package. Trump has pushed for a payroll tax cut to be a part of the bill, but the idea was not included in Senate Republicans’ proposal released last week.

Moore and Kerpen wrote in the op-ed that Trump “needs to reset the debate on the latest coronavirus relief bill” because Senate Republicans rejected the payroll tax cut and House Democrats’ own bill has a $3 trillion price tag.

Moore and Kerpen argued that Trump could defer payroll tax payments using the same section of the federal tax code that the Treasury Department used earlier this year to postpone the 2019 tax payment deadline from April 15 to July 15. The president, the said, could pledge to sign legislation that would forgive repayments of the deferred payments.

They said that Trump could cap the suspension at $75,000 of income to ensure the benefits are targeted to lower- and middle-income people.

Payroll taxes are used to finance Medicare and Social Security. Moore and Kerpen said that Trump could order the Treasury Department to put bonds into the Social Security and Medicare trust funds to protect the programs.

The op-ed authors argued that executive action to stop payroll tax collections would help Trump win reelection.

“This bold act would flip the political tables,” they wrote. “Democrats can’t credibly call it a tax cut for the rich.”

Democrats blasted the idea floated by Moore and Kerpen.

“A payroll tax cut does not help unemployed Americans – the group of people most in need right now – and it would drain money from Social Security and Medicare,” said House Ways and Means Committee Chairman Richard Neal (D-Mass.) and Rep. John Larson (D-Conn.), who lead’s the committee’s Social Security subcommittee.

Tax experts told Politico that while the Treasury could suspend payroll tax collections, it wouldn’t be able to require companies to pass on the savings to employees. Businesses withhold payroll taxes from their workers’ paychecks and may continue doing so if payroll tax payments are deferred, they said.