The White House Could Be Forcing You To Take a Loan
Thanks to Trump, millions of Americans might unwittingly take a loan they didn’t ask for in the first place
Tuesday marked the first official day of the “payroll tax deferral,” the White House’s new policy purportedly aimed at providing relief to American employees during the Covid pandemic via a temporary suspension of the 6.2% share of their Social Security tax. It’s a wonky law, and perhaps because of that has gone unnoticed by much of the general public. But beware: In the history of tax policies, the payroll tax deferral may just be the mother of bad tax policy. In effect, it could force millions of Americans to take a tax loan in 2020 that they will have to pay back in 2021. You heard that right. People are unwittingly taking a loan they didn’t ask for in the first place.
Let me explain a bit further.
What is the payroll tax?
Currently all workers who earn income pay what are called “payroll taxes” on their first $137,700 in earnings. This is not “income tax”; it is a separate 6.2% taken out of every paycheck that goes to fund Social Security. It is how the checks to Grandma and Grandpa get funded.
