The President wants a payroll tax cut and may not sign a bill without one.
As lawmakers scramble to get a deal done on the next stimulus bill before Congress is set to recess in a few weeks, there’s one unexpected part of the next stimulus bill getting a lot of attention.
As far back as late-April, which feels like years ago, I wrote that President Trump was in favor of a payroll tax cut. It’s an idea supported by Art Laffer, a well-known economist who was on the economic recovery task force. President Trump presented Laffer with the Medal of Freedom last year.
It appears that the President is doubling down on his demand that it be included in the next bill and many Republicans are not pleased.
The payroll tax is the common name given to a deduction from your paycheck used to cover FICA, which is Social Security and Medicare.
The Social Security tax is a tax of 6.2% of your earnings up to the Social Security wage base, which is $137,700 for 2020. The Medicare tax is a tax of 1.45% of your earnings but there is no limit as there is with Social Security. Your employer also pays this amount and if you are self-employed, you pay both sides.
If you earned $100,000 in 2020, you would be paying $6,200 towards Social Security and $1,450 towards Medicare.
