Trump's executive orders includes a postponement of the collection of payroll taxes from Sept. 1 through Dec. 31 for individuals earning less than $2,000 per week.
President Trump on Saturday signed four executive actions as an attempt to sidestep Congress – deadlocked in negotiations over another coronavirus aid package – and provide relief to American workers and businesses still reeling from the pandemic.
Currently, all employees and employers pay a 6.2% payroll tax on wages capped out at $137,700. Right now, an employee earning $50,000 per year would pay $3,100 in payroll tax. That money goes toward specific programs such as Social Security, health care, unemployment compensation and workers’ compensation. Workers also pay a Medicare tax of 1.45%.During the period that payroll taxes are paused, Americans can expect to see a bigger paycheck.
To pause payroll taxes, the Trump administration is employing a section of the tax code that allows the Treasury secretary to postpone certain tax-related deadlines during a federally declared disaster. It's the same authority the Treasury Department used earlier in the year to delay the April 15 tax-filing deadline until July 15.
Critics, including Democrats and some Republicans, say that temporarily pausing payroll taxes is an ineffective way to boost the nation's beleaguered economy because it does nothing to aid the millions of out-of-work Americans who are currently not receiving a paycheck.
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