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March 13, 2020 – The White House’s proposal to eliminate payroll taxes from now through the end of the year would cost $843 billion, fail to target the most vulnerable families and communities, and not address the economic needs of those most harmed by the COVID-19 epidemic, the Institute on Taxation and Economic Policy (ITEP) said today.
ITEP today released an analysis of the Trump administration’s proposal to eliminate payroll taxes for employees and employers through the end of the year. This includes Social Security (FICA) and Medicare taxes, at 12.4 and 2.9 percent of worker pay respectively. Both are split between employee and employer. Nearly two-thirds of the tax cut (65 percent) would go to households in the top 20 percent.
The response is flawed because it provides a large subsidy to employers, provides more money to wealthier workers, and does not help workers displaced by the crisis.