First-off, what are Payroll Taxes? Payroll taxes are taxes paid on the wages and salaries of employees. If you look on your paycheck, you will find deductions for state and federal taxes. Where I live, there are no state income taxes or sales taxes, but there are confiscatory statutory taxes that a LFoD-Stater like me is compelled to pay. Among them are payroll taxes (that our employers are responsible for half of, but just transfer back on to the employee through lower wages in reality because the split is not determined by law but by market elasticity ...though that’s a story for another time). The ones that concern this post are the ones that concern Social Security and Medicare, sometimes denoted as FICA (Federal Insurance Contributions Act) and MEDFICA (Medicare Federal Insurance Contributions Act). On my paycheck, they’re listed explicitly as “Social Security Tax” and “Medicare Tax”. Regardless of name, they comprise a tax of 7.65% (6.2% for Social Security; 1.45% for Medicare) of your wages (actually 15.3% is owed to the government by employer and employee, but as previously mentioned we only pay the employee’s half in theory ...note: I have been both an employer and an employee over my working life).

President Trump’s executive order** defers the collection of payroll taxes from September 1st until December 31st. ** So, if you make less than $104,000 (about $2,000 per week) you will not pay these taxes. So, if you work a **40 hour week **at a payrate of $15 per hour, you can expect to make an extra $830 from September 1st to December 31st. That’s approximately a $46 per week bump in your paycheck.

Of course this means that if you’re not collecting a paycheck from gainful employment, you will not earn the benefit (meaning the government doesn’t confiscate the money that they normally would do). I’ve read that virtually all Democrats and some Republicans are not in favor of the payroll tax cut. The charitable would consider their reistance regarding this method of (CCP-Covid-19 caused) financial impact relief on the funding of Social Security and Medicare (a huge source of government revenue), and the downstream impact of the diversion of monies to these safety-net programs. I believe that payroll tax cuts, like tariffs (similarly criticized by most of the same swampers) are a gesture that have an ultimate goal beyond the obvious and immediate one. It’s not so much the enacting itself as it is a motivator to encourage a change in behavior. In the former, to incentivize (versus the $600 weekly bump to unemployment insurance that was in-place after the first relief package) someone making $15 an hour to go back to work (where I work, there are more than a dozen jobs that pay $16 to $18 per hour going unfilled), and in the latter, compelling foreign companies to modify their trade business model by employing a more reciprocal relationship in practice. President Donald J. Trump’s motivational methods in-action.

KAG