- The White House continues to call for a payroll tax cut, even with little support among Senate Republicans.
- In a statement, a White House spokesman said the tax exemption “should” be part of the next financial aid package.
- But Republicans have expressed skepticism about the effectiveness of a payroll tax cut to boost the economy.
- “A payroll tax cut is extremely expensive … it would only benefit people who are working. It would also displace other expenses that I think are much more important,” said Senator Susan Collins.
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The White House is investigating a payroll tax cut that President Donald Trump has championed, despite weak support from Senate Republicans who say it would not be an effective measure to boost the economy.
White House spokesman Judd Deere said in a statement to Business Insider on Tuesday that the tax exemption “should” be part of the next economic aid package that Congress is now designing.
“As he has done since the start of this pandemic, President Trump wants to provide relief to American workers who have been affected by this virus and one way to do this is with a payroll tax exemption,” said Deere. “He has asked Congress to approve this earlier, and he believes it should be part of any phase four package.”
The same statement was given to The Washington Post last week before the talks began in earnest on Monday, and before Republicans fell into chaos about the size of the spending package and what priorities to pursue.
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Trump pushed for the payroll tax cut in March as the economy collapsed due to the coronavirus pandemic. Lawmakers from both parties rejected the idea in the $ 2 trillion CARES Act, but the president now seems determined to push the measure again.
He threatened to suspend the economic relief bill if a payroll tax exemption was not included in a Fox News interview that aired Sunday. Republican lawmakers, however, are great, complicating the Republican Party’s efforts to keep spending levels below $ 1 trillion.
Payroll taxes are 7.65% of earnings from employee paychecks and another 7.65% that are collected from employers to finance the Social Security and Medicare trust funds. If a cut or direct holiday is implemented, it would increase workers’ wages on their paychecks.
But it wouldn’t do much for the 20 million Americans who are out of work. Senator Susan Collins of Maine told reporters that the tax exemption would absorb a significant amount of federal spending that is needed for other priorities.
“A cut in payroll taxes is extremely expensive … it would only benefit people who are working. It would also displace other expenses that I think are much more important,” Collins said.
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Senator John Thune criticized the payroll tax cut and said a stimulus check would generate greater economic benefits.
“I’m not a fan of that,” said Thune. “If it’s about choosing between writing checks and cutting payroll taxes, I think it’s pretty clear that checks actually have a more direct benefit to the economy.”
That was echoed Monday by Senate Finance President Chuck Grassley. In an interview with CNN, Grassley said: “I think when a person has a check in hand … I think that is going to do more financially than if we give away $ 30 for each paycheck.”
Senate Majority Leader McConnell said Tuesday that Republicans support a second round of stimulus checks, though details about cash payments remain sparse.
However, Republican lawmakers are still deeply divided into other components to include in another financial aid package, such as boosted unemployment benefits. Those expire within five days.
“I am going to present a bill in the next few days that is a starting point, which enjoys quite significant support among Republican senators,” McConnell said after the Republican lunch in the Senate. “Probably not all of them.”
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