Trump: ‘I would love to see a payroll tax cut’
President Trump says a payroll tax cut would substantially help workers and small businesses.
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The IRS postponed the tax deadline for the first time in history amid unprecedented challenges brought on by the coronavirus outbreak – however, the move may end up hurting some taxpayers who have not yet filed.
Amid economic stress caused by measures taken to prevent the coronavirus from spreading – including closing businesses around the country – the Trump administration last month announced a delay in the tax filing deadline to July 15, from April 15. Most states have since followed suit.
The postponement was initially limited to certain people and businesses with tax obligations but was later expanded to include all filers.
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However, some have noted the policy doesn’t benefit all Americans equally. For example, people who owe the agency are essentially getting a short-term loan as they are able to hold onto their cash for a bit longer.
But many middle- and lower-income households rely on refund checks for regular financial obligations – and that cash could be even more important given the current economic picture. That’s why Treasury Secretary Steven Mnuchin has encouraged people who are expecting a return to file as soon as possible.
However, with the delay finalized – and the IRS tasked with sending out economic impact payments – return processing is likely to be slower. While the number of returns the agency had received as of April 3 was down nearly 6 percent when compared with the same period last year, the number of returns it had processed was down 8 percent.
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Further, the Institute on Taxation and Economic Policy noted that a payroll tax cut – which is another measure the president said this week he would like to see implemented – would largely benefit the wealthiest 20 percent of taxpayers. That’s because it would benefit those who were still employed, with bigger benefits reaped by individuals with more earnings.
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The payroll tax is paid separately from federal income taxes and funds Social Security and Medicare. Employers and employees each pay 6.2 percent for Social Security, and 1.45 percent for Medicare and an additional 0.9 percent is levied on the highest earners.
According to data from the IRS, more than 93.3 million Americans had filed their return as of April 3. Typically, the agency processes around 150 million returns per year.
A recent survey from TaxAct, which polled 2,600 individuals, found that 61 percent of respondents had already filed their return as of April 2. An additional 17 percent of people said they would file at some point in April. Only 7 percent of respondents planned to wait until July.
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