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Senators Prod Social Security Actuary on Impact of Ending Payroll Tax

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Top Democratic senators are prodding Social Security Administration Chief Actuary Stephen Goss to conduct an analysis on the impact of “hypothetical legislation” eliminating the payroll tax.

President Donald Trump issued an executive order, the Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster on Aug. 8. The order allows employers to temporarily defer payroll taxes. Trump has said the deferred taxes could later be forgiven, or the cut made permanent.

Senate Democratic leader Chuck Schumer, D-N.Y., and Sens. Chris Van Hollen, D-Md.; Ron Wyden, D-Ore.; and Bernie Sanders, I-Vt., told Goss Wednesday in a letter to analyze the impact of eliminating Social Security’s payroll and self-employment taxes — paid by employers and employees — that fund Social Security’s Old Age and Survivors Insurance (OASI) Trust Fund and Disability Insurance (DI) Trust Fund.

“Specifically, what would be the implications of such legislation for revenue coming into the OASI and DI trust funds, at what point would the OASI and DI trust fund asset reserves become depleted, and how would this affect the ability to pay scheduled OASI and DI benefits on a timely basis?” the senators asked.

“While we would not be supportive of this hypothetical legislation, we would like to be aware of its potential implications,” the senators wrote.

Wyden and others argued that Trump’s executive order could “drain” the Social Security trust fund.

“While employers are unlikely to risk a massive tax liability by not collecting payroll taxes or having to double up collection later, if they do go along with this stunt, it would drain the Social Security trust fund,” Wyden said in a statement.