Pay & Benefits

Trump promises to erase troops' 2021 deferred tax debt, but lawmakers say he can’t

President Donald Trump promised this week to forgive all deferred payroll taxes (including those included in troops' paychecks) if he wins re-election this fall, but lawmakers dismissed the assertion as unconstitutional and amounting to little more than pandering.

The news comes just days after federal officials confirmed that millions of federal workers — including service members from all five branches and Defense Department civilian employees — will see a pay boost of more than 6 percent for the rest of 2020, but have to pay back all of that money next year under Trump’s payroll tax deferral plan.

The move, designed to act as an economic stimulus in response to the ongoing effects of the coronavirus pandemic, has drawn criticism as a short-term ploy that could cause long-term financial damage for families whose paychecks will fluctuate over the next half year.

Many advocates have expressed concerns that troops and their families may not be able to handle significant reductions in pay for several months next year, but Trump on Thursday promised to handle that problem when it arises.

“When we win I, as your President, will totally forgive ALL deferred payroll taxes with money from the General Fund,” he said in a tweet.

“I will ALWAYS protect Seniors and your Social Security! (Democratic presidential candidate) Joe Biden will do the opposite, he will raise your taxes and DESTROY our Country!”

The White House did not offer any explanation of how Trump might wipe away the debt, since Congress holds the power of taxation under the constitution.

In his memo outlining the payroll tax deferral, Trump instructed the Secretary of the Treasury to explore ways to eliminate the requirement to repay those taxes, to include lobbying Congress to adopt new legislation erasing the debt.

Democrats in Congress immediately attacked the president’s tax pledge.

Rep. Don Beyer, D-Va., said that the administration “should let military service members and federal workers opt out” of the “payroll tax scheme.” Others called for the entire plan to be reversed.

The tax deferral affects all enlisted members, virtually all warrant officers and all officers up through the grade of O-4. Others who earn more than $8,666.66 a month will not have their Social Security taxes deferred and will continue to pay the payroll taxes.

Repayment of the taxes would begin as early as January 1, when troops are expected to see a 3-percent pay raise go into effect. However, Congress still has not finalized plans for that annual raise, and it would not completely cover the money owed.

Reporter Karen Jowers contributed to this report.

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