Trump has temporarily deferred payroll taxes which funds Social Security to help Americans amid the economic fallout due to Covid-19.
Earlier this month, President Donald Trump temporarily deferred payroll taxes, which fund Social Security, for the rest of the year to give economic relief to workers making under $100,000 annually. But he and his aides have issued conflicting and imprecise statements about what his actual proposal means for the future of the taxes.
On several occasions, Trump has said that he will “make permanent cuts to the payroll tax” or will “be terminating that tax” if he wins re-election. Aides, however, have said that he was referring to “permanent forgiveness” of the four-months’ worth of taxes, rather than eliminating payroll taxes altogether.
Asked about the impact that such actions would have on the Social Security Trust Fund, Trump said on Aug. 10 that the revenue would be reimbursed through the government’s general fund. Such an idea is plausible if Trump referred to permanent forgiveness of taxes for four months, but it would need approval from Congress.
Democratic Presidential candidate Joe Biden has repeatedly claimed that Trump has a “plan” that would “bankrupt,” “defund,” or “wipe out” the Social Security program. During the Democratic National Convention, he said “He’s proposing to eliminate the tax that pays for almost half of Social Security without any way of making up for that lost revenue.” However, his statement is misleading.
The temporary payroll tax forgiveness would not “gut” or “wipe out” the program that pays retirement and disability benefits. It is not clear what Trump would do in a second term. Trump wants to make his payroll tax cut deferral permanent to help America’s workers. The President has been clear that his payroll tax cut will have ‘zero impact’ on Social Security. On the occasions that Trump has mentioned eliminating the payroll tax, he has also said the money to pay benefits would instead come from the government’s general fund. Stephen Goss, the chief actuary for the Social Security Administration told factcheck.org that the legislation with such a stipulation would leave Social Security “essentially unaffected,” a point not mentioned by Biden.
The general fund has been used to reimburse the Social Security Trust Fund with $102.7 billion and $114.3 billion respectively during the payroll tax holiday in 2011 and 2012. The lost revenue from a four-month holiday is estimated to be about $100 billion, according to the Committee of a Responsible Federal Budget.