Trumps Brilliant "strategeery"

PRESIDENT TRUMP’S PAYROLL TAX HOLIDAY, EXPLAINED
by Kevin Ryan

After talks with Democrats over a new coronavirus relief package broke down, President Trump yesterday signed a series of orders intended to bypass the congressional stalemate. The orders extend the moratorium on evictions, defer student loan payments through the end of the year, and offer up to $400/week of enhanced unemployment benefits.

But the centerpiece of the plan is a payroll tax holiday.

DETAILS: Every payday, 7.65% of your wages (on the first $137,700 of earnings) are subtracted from your paycheck to fund Social Security and Medicare (6.2% for Social Security; 1.45% for Medicare). Your employer pays an equivalent amount of tax*.

The president's order tells the IRS to stop collecting these payments from people making $104,000/year or less. The payments are not cancelled, but are instead deferred until the end of the year (unless congress cancels them… more on this later). The order applies to people making a bi-weekly salary of $4,000 or less (which is an annual salary of $104,000).

LEGALITY: Section 7508A of the tax code allows the Treasury Secretary to postpone tax-related deadlines during a federally declared disaster. Earlier this year, the same provision was used to delay the filing date for federal income taxes.

“He does have the authority to postpone the collection of the payroll tax under the Internal Revenue Code,” said Michael Graetz, a professor of tax law at Columbia University. “But it's only the authority to postpone and not forgive…. Only Congress can do that.”

POLITICS: Payroll taxes are shared by the employer and employee. The CARES Act included payroll tax relief, but only for employers. Companies can defer their share of Social Security taxes from March 27 through Dec. 31, at which point 50% is due, with the remainder due by Dec. 31, 2022.

However, Congress was less receptive toward suspending the portion of the payroll tax paid by employees, in part because it would only help people with jobs, and the CARES act was intended primarily to help people that were unemployed.

But now that companies have begun reopening, the politics have shifted. As of this week, far, far more people are now employed than unemployed:

Currently employed: 140 million
Currently unemployed: 16 million

Meaning, the President’s payroll tax holiday would help 9 times more voters than the Democrat’s plan to continue unemployment bonuses.

And from an economic impact standpoint, the unemployment bonuses literally incentivize not working, something which would hurt the economy right before an election. Anyone who read the media accounts of the latest employment data on Friday (headlines said that “only” 1.8 million more people went back to work) knows that a deceleration in the jobs recovery will be used against Trump politically.

Reducing payroll taxes, on the other hand, incentivizes going back to work by essentially giving everyone who does a 7% raise.

The politics of the payroll holiday were summarized last week in a Wall Street Journal editorial written by economic analysts Stephen Moore and Phil Kerpen:

“Mr. Trump should instruct the Treasury to stop withholding payroll taxes. To protect benefits, he should order Treasury to put bonds into the Social Security and Medicare trust funds. Since Barack Obama did that in 2011, his vice president would have a hard time explaining his opposition to it now. So would Mrs. Pelosi, who in 2011 called the tax cut ‘a job creator’ that would give the economy ‘a boost.’

“The catch is that under any deferral, workers would still be on the hook for paying the taxes later. Or would they?

“Mr. Trump could also pledge to sign a bill—now or after the new Congress takes office on Jan. 3—to forgive those repayments. That would make the election a referendum on middle-class taxes. Mr. Trump can give Americans a tax cut now, and sign it into law later.

“This bold act would flip the political tables. Democrats can’t credibly call it a tax cut for the rich. Mr. Trump could cap it at [$104,000] of income, so the vast majority of the benefit would go straight into the wallets of middle- and lower-income workers, almost all of whom pay more payroll than income tax.

“Voters would instantly see the 7.5% boost to their paychecks. Mr. Trump could then run against the $3 trillion House spending bill. It would be right out of the playbook of Harry S. Truman, another incumbent president who faced a big deficit in the polls and was told he couldn’t win re-election. Late in the summer of 1948, Truman stopped negotiating with what he called the ‘do nothing’ Republican Congress and started campaigning against it. He won—and so could Mr. Trump.”

Whether this plays out is not as certain as Moore and Kerpen make it out to be. Democrats (and the media) are already presenting Trump’s payroll holiday and other relief orders as “not enough”, and are threatening to block them in court.

Of course, the very act of blocking relief would be politically dangerous for Democrats.

Stay tuned…

SOURCES: www.cnbc.com/2020/08/03/how-trump-could-force-a-payroll-tax-cut-without-waiting-for-congress.html
www.kiplinger.com/taxes/601197/what-trumps-payroll-tax-cut-will-mean-for-you
fred.stlouisfed.org/series/UNEMPLOY
www.washingtonpost.com/business/2020/08/09/heres-what-is-actually-trumps-four-executive-orders/

*Economists are in broad agreement that the 6.2% slice of the payroll tax that is paid by the employer comes out of the worker’s paycheck as lower wages.

Are you really saying that you are no fan of liberal policies? You claim to be a God Loving Man right?  I figure that you are pro gun and pro 2nd amendment.  And you are pro life as you mention that a few times too.  And I bet you are for legal immigration and against illegal immigration.  Guess what I'm for all that too.  But I'm pro environment and Trump could care less about our environment.  But guess what.  A dirty environment is killing honey bees and children.  Excess Air Pollution kills people too.  Dirty drinking water can kill people too.  Too many people can also lead to excessive pollution and that can kill people too.  Too many people leads to excessive stress and we know that stress can kill people.  Trump wants to destroy the USEPA and bring back dirty coal.  Burning coal causes excessive air pollution.  We need to develop more clean energy resources not bring back dirty coal. 

I'm with you until you went into the coal thing.  Coal is not clean and actually natural gas is cleaner.  Natural Gas is also cheaper that coal.  Natural gas is what is destroying the coal industry now.  Industry and the power companies are moving to cleaner and cheaper forms of making electricity.  

Now from time to time we have volcanoes that erupt and spew millions of tons of gas and fine particles way up into the air. And yes that does effect the air and can block sunlight. But it never last very long and is limit in scope and range.  And the rains wash the soot out of the air.  The soot is dispersed across the globe.  Dilution is the solution to pollution.  Where when we burn coal the smoke is released down at ground level not high up into the atmosphere.  We humans live at ground level so the air pollution form coal effects us more.  We can't breath in the SO2 or Sulfates without getting sick.  And the coal is burned 24/7 for 365 and for 20 years.  We can't do anything about volcanoes but that does not mean that we should add to the pollution that volcanoes put out by allowing coal to be burned without controls. 

Man makes the pollution and man can control the pollution by changing the way we make electricity.  Why would God allow air pollution to kill humans? We don't have to wait for a God to control the purity of the air and water.  We are the ones that live on this planet and we need to take matters into our own hands and clean up the environment. God won't do that for us. 

I'm glad that you clarified your position and explained that it's the liberal policies that you don't like.  I don't like some of the liberal polices either.  If the GOP were more environmental friendly I would vote for the GOP most of the time.  But let me be very clear about Donald Trump.  The GOP made the biggest mistake by selecting Donald Trump for their candidate.  They would be smart to get rid of him and have someone else represent the GOP.  I never did like Donald Trump when he was on the TV show the Apprentice.  He was bombastic then and still is today. He is arrogant and uneducated in many things.  I'm looking to see who Biden chooses for his running mate today.  I may not even vote this time.  IN is more GOP than Dem and I'm wondering why I should waste my time even voting this year. I'm not in good health and have been having chest pains off and on.  I don't have any kids so don't have to worry about any kids if I die.  

Polls...

Monmouth has Biden up by 13 nationwide. 😳

I’ve always found that Rasmussen are the most reliable polls and he has Trump’s approval rate at 49-51%. How can Trump have that kind of approval rate and be behind by 13? No way.

By the way Rasmussen has Trump behind by 3 and that is within the margain of error.

In my opinion Biden just hung an albatross around his neck by picking Kamala Harris.

Poor campaigner that got hardly any votes in the primaries. She has a lot of baggage

www.usatoday.com/elections/results/primaries/democratic/

Harris will be a formidable opponent for the President. Better vote early and in the case of mail-ins, often. Seriously, it is over, but still need to vote!

Going back to look she actually dropped out before the first vote was cast . She dropped out in December. No wonder I couldn’t find any votes for her.

What does that mean?