Trump Says Troops Won’t Have to Pay Back Deferred Payroll Taxes -- If He Wins

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President Donald Trump speaks during a campaign rally
President Donald Trump speaks during a campaign rally at MBS International Airport, Thursday, Sept. 10, 2020, in Freeland, Mich. (AP Photo/Evan Vucci)

President Donald Trump pledged that service members and Defense Department civilians won't have to pay back the extra money that will be in their paychecks through the end of the year under the payroll tax deferral plan -- if he wins re-election in November.

In a Twitter post Thursday night, Trump wrote, "When we win I, as your President, will totally forgive ALL deferred payroll taxes with money from the General Fund."

He also charged that former Vice President Joe Biden would "do the opposite" if he wins.

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Trump essentially is promising a temporary pay raise, starting with the Sept. 15 pay period, that would last until Jan. 1. He also essentially is promising to reverse course on a plan pushed by his administration, which was opposed by Democrats and widely shunned by the private sector because of the hardship paying back the deferred taxes would cause.

Under the existing payroll tax deferral plan, the extra money would have to be paid back in the first four months of next year through larger withholdings, with penalties that have yet to be defined for late repayments.

Trump's promise would apply to all service members, DoD civilians and the entire federal workforce who qualify for the existing payroll tax deferral plan. Participation in the deferral plan is mandatory for service members, DoD civilians and federal employees.

It is not immediately clear how the promise would apply to the private sector. Under the executive order issued by Trump on Aug. 8, businesses can choose whether to participate in the payroll tax deferral plan, and many have voiced opposition.

A pay chart circulating in the Army gave examples of how much more in total pay service members who qualify for the deferral could expect to receive from Sept. 15 through the end of the year.

For an E-2, it is $481.74; for an E-7, it's $772.35; for an O-1, it is $815.20; and for an O-6, it's $1,718.94.

In guidance for service members issued last weekend, the Defense Finance and Accounting Service said, "Effective for the September mid-month pay, DFAS will temporarily defer the withholding of your 6.2% Social Security tax if your monthly rate of basic pay is less than $8,666.66.

"If your monthly rate of basic pay is at or above this threshold, your Social Security tax withholding will not be affected by the temporary deferral," it added.

DFAS also made clear that the program is mandatory for service members and DoD civilians. Separate guidance from the Internal Revenue Service stated that the plan is mandatory for the entire federal workforce.

Service members and civilians "are not eligible to opt-out of the deferral if their Social Security wages fall within the stated limits. The deferral will happen automatically," DFAS said.

In signing the Aug. 8 executive order authorizing the payroll tax deferral, Trump suggested that he might seek to waive repayments; he appeared to double down on the promise in the tweet Thursday night.

House and Senate Democrats have said that the deferral plan is a threat to the stability of the Social Security trust fund. Rep. 

Don Beyer, D-Virginia, charged Friday that Trump is seeking to buy votes.

"The President's promise to forgive deferred payroll taxes if he is re-elected is open, intentional corruption," said Beyer, a member of the tax-writing House Ways and Means Committee, in a statement. "It is akin to paying people for votes."

In a news conference following his signing of the Aug. 8 executive order, Trump said he was "deferring payroll tax obligations in light of the ongoing COVID-19 disaster."

"It is clear that further temporary relief is necessary to support working Americans during these challenging times," he said, as Democrats and Republicans remained at odds on another relief bill.

The tax, which goes to support the Social Security and Medicare trust funds, currently amounts to 15.3% -- half paid by the employer and half by the employee.

For employees, 7.65% of wages are withheld from each paycheck -- 6.2% for Social Security and 1.45% for Medicare.

-- Richard Sisk can be reached at Richard.Sisk@Military.com.

Related: Troops, DoD Civilians Won't Be Able to Opt Out of Payroll Tax Deferral Plan

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