The Trump administration is looking to ensure that the payroll tax deferral implemented by executive action is fully forgiven, meaning there would be no liability for the deferred taxes.
“As far as the payback is concerned, you know, you could stretch that out for a long period of time. … You’ve got a lot of elbow room to get around that issue,” White House economic adviser Larry Kudlow said on Wednesday.
President Trump signed an order on Aug. 8 postponing payroll tax payments on income earned between Sept. 1 and the end of the year until 2021 for workers earning less than $104,000 a year.
As it currently stands, workers and their employers would be on the hook in 2021 for the taxes that were deferred this year. Removing the liability would require congressional action.
Retroactively forgiving the liability would be different from ending the payroll tax.
Kudlow on Aug. 13 revised Trump’s claim that he would abolish the payroll tax if reelected in November, explaining that the plan is to forgive the deferred taxes and perhaps extend the cut into next year.
“The payroll tax deferral will be forgiven,” Kudlow said outside the White House last week. “When he says, ‘We’ll terminate it,’ that’s what he is referring to. It will be forgiven.”
