In order to prevent adverse impact on the federal workforce, AFGE is asking the Trump administration to allow federal workers to decide whether they want to participate in the administration’s plan to defer payroll tax between now and the end of the year -- a scam that will leave workers with a huge tax bill just after the holidays, saddling them with penalties and interest fees if they can’t pay it back in time.
President Trump on Aug. 8 signed an Executive Order (EO) deferring payroll taxes between Sept. 1 and Dec. 31, 2020. The EO applies to anyone making less than $104,000 a year, or $4,000 a pay period. Employees will have to pay it back by May 1, 2021.
While business associations have called the plan “unworkable” and refused to participate, the Trump administration is forcing more than 1.2 million federal workers to be guinea pigs.
In a letter to Office of Management and Budget Director Russell Vought, AFGE President Everett Kelley said federal employees were not given enough information about the tax deferral prior to its implementation, and many are not aware that they will have to pay back the deferred taxes during the first four months of 2021.
“While some federal employees may wish to defer their payroll tax obligations, many others do not,” Kelley wrote. “As National President of the American Federation of Government Employees (AFGE), which is the largest union for federal workers, I have heard from many of our members. Most have been unaware that they would be required to re-pay the taxes starting in January 2021 and when they learn this, they are strongly opposed to having their tax deferred involuntarily.”
“I therefore ask that employees be given the opportunity to opt in, rather than have participation be the default. At a minimum, federal employees should have the ability to opt out of the deferral,” he added.
Here’s why Trump’s Social Security Tax Scam is a bad idea:
- Employees will be stuck with a large tax bill at the end of the deferral period.
- You will have to pay double your tax rate during the first 4 months of 2021.
- If you can’t pay it back, you are on the hook for interest fees and penalties.
- Your paychecks will be smaller next year due to a new tax liability.
- This action is not meaningful relief from COVID-19, just a deferred tax bill with potentially disastrous effects.
“Federal employees should not be forced to become involuntary debtors subject to interest and penalties as this [Old Age Survivor and Disability Insurance] tax deferral scheme apparently contemplates,” Kelley added.