WASHINGTON—President Trump’s decision to defer payroll taxes until the end of the year is leaving challenges for lawmakers to manage after he leaves office in January, and they haven’t figured out what—if anything—to do.
Members of Congress in both parties weren’t keen on the August executive action, which let employers stop collecting the 6.2% Social Security payroll tax from many workers in the final four months of 2020. The move was meant as a form of relief during the economic slump caused by the coronavirus pandemic, but few employers stopped withholding.
That created a predicament for Congress. Employees whose payroll taxes temporarily shrank will face double withholding starting in January, which could pinch households that haven’t planned for it.
Doing nothing could cause harm for those workers, but helping only them could be unfair to others whose taxes continued to be withheld.
“No one will be happy no matter how that gets resolved,” said Mark Mazur, a former Obama administration official who now directs the Tax Policy Center. “It’s kind of like a no-win thing.”
