Senators Push to Give Troops a Way Out of Payroll Tax Deferral Plan

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A soldier deposits funds into a safe in a finance office, Nov. 4, 2013, at Bagram Air Field, Parwan province, Afghanistan. (U.S. Army/Sgt. Sinthia Rosario)
A soldier deposits funds into a safe in a finance office, Nov. 4, 2013, at Bagram Air Field, Parwan province, Afghanistan. (U.S. Army/Sgt. Sinthia Rosario)

A bill introduced Friday would make the Trump administration's controversial payroll tax deferral plan optional for service members, Defense Department civilians and the federal workforce.

Sen. Chris Van Hollen, D-Md., introduced the bill, which is backed by 16 other Senate Democrats.

During the hardships brought on by the COVID-19 pandemic, "our public servants deserve the ability to choose what makes most sense for them and for their pocketbooks," Van Hollen said in a statement.

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The payroll tax deferral began last month under an executive order issued by President Donald Trump and is mandatory for the military, DoD civilians and federal workers, but optional for private employers.

Under the plan, the usual paycheck withholding of 6.2% Social Security tax would be deferred through the end of this year, but would have to be repaid from January through March next year through larger withholdings.

In a Sept. 10 Twitter post, Trump said that the deferred taxes of program participants would not have to be repaid -- if he wins re-election in November.

"When we win I, as your President, will totally forgive ALL deferred payroll taxes with money from the General Fund," Trump said.

In his statement, Van Hollen charged that "President Trump is using federal employees and our troops as pawns in his payroll tax scheme, and it's unacceptable."

He cited support for making the deferral plan optional from the American Federation of Government Employees, the National Treasury Employees Union, the International Federation of Professional and Technical Engineers and the National Federation of Federal Employees among other organizations.

Both Van Hollen and Rep. Don Beyer, D-Va., have noted that Treasury Secretary Steve Mnuchin in recent testimony to the Senate Banking Committee said that making the deferral optional was "reasonable."

On the House side, Beyer, with 38 other House Democrats and four Republicans, wrote to Mnuchin on Oct. 2 urging him to consider making the deferral optional.

"Feedback from civil servants and service members we represent indicates that the withholding of payroll taxes has been chaotic and confusing for many of those affected," the letter said.

"There is widespread concern among the ranks of both groups that deferred payroll taxes will lead to increased tax bills in January and potentially even fees for those who are unable to repay deferred taxes."

In a Sept. 11 statement, Beyer also charged that Trump's deferral plan and the promise to forgive repayments if he wins amounted to an effort to buy votes in November.

"The President's promise to forgive deferred payroll taxes if he is re-elected is open, intentional corruption," said Beyer. "It is akin to paying people for votes."

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

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

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