Ways and Means Republican Leader Kevin Brady (R-Texas) today introduced the “Support for Workers, Families, and Social Security Act,” legislation that provides a tax cut for low- and middle-income workers through the end of the year.
“Congressman Brady should be applauded for his legislation cutting payroll taxes. This will increase take-home pay and increase the value of work for Americans across the country and builds on the Trump-GOP effort to enact tax relief and deregulation so that the economy can continue recovering and Americans can go continue going back to work,” said Grover Norquist, President of Americans for Tax Reform.
This legislation builds on President Trump’s payroll tax executive order which deferred social security payroll taxes from September 1 to December 31, 2020. This proposal makes the moratorium permanent so that taxpayers do not have to pay back payroll tax relief next year.
The social security tax is a 12.4 percent tax split between employees and employers. Americans pay a 6.2 percent payroll tax on wages out of every paycheck, while employers pay the other 6.2 percent. This legislation suspends the 6.4 percent paid by workers through the end of the year.
This will lead to significant tax reduction. For instance, a family earning $120,000 per year could see a tax cut of $2,500 while an individual making $55,000 could see a tax cut of over $1,100.
The legislation also ensures self-employed Americans received the same tax relief. Self-employed Americans pay the full 12.4 percent tax so there was some uncertainty whether they would receive relief under President Trump’s deferral.
In addition, the proposal protects seniors by ensuring the social security trust fund is not depleted by this tax cut.
This legislation should be supported by Congress and signed into law.
Importantly, Democrats supported payroll tax cuts a decade ago under when they were enacted in 2011 and 2012 under President Obama.
In fact, House Speaker Nancy Pelosi (D-Calif.) and Democrat Vice Presidential Candidate Joe Biden repeatedly praised payroll tax cuts noting that they would put more money in the pockets of American families.
For instance, on December 13, 2011, Speaker Pelosi called on Congress to enact a payroll tax cut as it would benefit middle class families:
“This is about a thriving middle class. It’s about a payroll tax cut that does what it sets out to do, puts $1,500 in the pockets of Americas families who need it, who spend it and in doing so inject, inject demand–demand, demand–into our economy which further creates jobs.”
Similarly, on May 22, 2012, Biden highlighted the administration’s efforts to cut the payroll tax, noting that it would reduce taxes for 98 percent of Americans:
“In December of 2010 we passed the payroll tax that gave each and every American an average of $1,000 tax cut. One thousand dollars less was taken out of their pay in payroll taxes. We repassed that not long ago, allowing another $1,500 to go into people’s pockets instead of going into taxes. Ninety-eight percent of the American people — they get a pay stub. They pay payroll taxes. So when you cut taxes for people with a — with a payroll tax, 98 percent of the American people are getting a tax cut.”
Given this past support for payroll taxes, Democrats should have no problem supporting and voting for Congressman Brady’s Support for Workers, Families, and Social Security Act.