WASHINGTON, D.C. – Today the U.S. Chamber of Commerce along with more than 30 trade associations sent a letter to Congress and the U.S. Department of Treasury urging them to work together on a path forward that provides much-needed tax relief to American families without imposing a large tax bill in the future, which the recent Executive Order (EO) on payroll tax deferral would do.
The association letter states, “Under current law, the EO creates a substantial tax liability for employees at the end of the deferral period. Without Congressional action to forgive this liability, it threatens to impose serious hardships on employees who will face a large tax bill as a result of deferral.”
To demonstrate the magnitude of the potential tax bill compared to immediate benefit of deferral, the U.S. Chamber created an income impact analysis chart, showing that while employees who make under $104,000 a year will get a relatively small benefit in each paycheck, they will owe a lot in 2021.
The letter goes on to say “Many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year. It would also be unworkable to implement a system where employees make this decision. Therefore, many of our members will likely decline to implement deferral, choosing instead to continue to withhold and remit to the government the payroll taxes required by law. We hope Congress and the Administration come together on a path that supports workers instead of burdening hardworking Americans with a large tax bill next year.”
The letter can be read in full here.