AARP endorses Democrats’ measure to overturn Trump payroll tax deferral

The American Association of Retired Persons (AARP) this week endorsed a Democratic resolution to overturn President Trump’s payroll tax deferral, arguing that the deferral is “engendering uncertainty among older Americans and the general public about Social Security and its ability to pay promised benefits.”

AARP, which says it has about 38 million members, is backing the Congressional Review Act resolution introduced by Rep. John Larson (D-Conn.), the chairman of the House Ways and Means Committee’s Social Security subcommittee, to disapprove of the IRS guidance implementing the deferral. Larson’s subpanel is scheduled to hold a hearing on the measure Thursday.

“While AARP appreciates the need to provide assistance to Americans struggling with the economic consequences of the pandemic, Congress and the Administration should pursue more effective approaches to providing economic relief — including for those unable to work — that do not undermine confidence in the stability of the Social Security system,” AARP Executive Vice President Nancy LeaMond wrote in a letter to Larson and Rep. Richard Neal (D-Mass.), the chairman of the full Ways and Means Committee.

Trump signed a memo in August on deferring payroll taxes in an effort to provide relief to workers during the coronavirus-related economic downturn. Under the IRS guidance implementing the memo, employers can choose to stop withholding Social Security taxes from employees’ paychecks from Sept. 1 through Dec. 31. Employers would then collect the deferred taxes by increasing the amount withheld from workers’ paychecks in the first few months of next year.

The executive branch is deferring payroll taxes for civilian employees at federal agencies and for members of the military. But few other employers have announced that they are implementing the deferral, expressing concerns about the potential for their employees to face smaller-than-usual paychecks next year.

AARP noted in its letter that there are widespread concerns from employers about the deferral.

LeaMond also wrote that AARP believes that “suspending, reducing, or eliminating contributions to Social Security will interfere with the program’s long-term funding stream.” She said that AARP expressed similar concerns to the Obama administration when it cut payroll taxes.

LeaMond said that AARP conducted a survey in August that found that the program has widespread public support from the public.

“In the midst of the economic crisis brought about by COVID-19, over half of our respondents indicated that Social Security is even more important now due to the pandemic,” she wrote.

Trump’s allies have said that any legislation to forgive the deferred taxes will transfer money from the general fund to the Social Security trust fund.