This Tuesday the postponement of the payroll tax came into effect, a measure approved by the president, Donald Trump, which allows companies to offer their workers a temporary deferral of 6.2% of the rate they pay to Social Security.
The measure will be valid until December 31.
Taxes owed will not be forgiven, only deferred.
The Internal Revenue Service (IRS) noted that deferred amounts must be paid before April 30, or penalties or interest will apply.
The IRS holds employers responsible for deferring and eventually paying the tax.
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Employees participating in the deferral can expect a short-term increase in their salary, but they may see a decrease in January, when the tax begins to apply again and they must pay the deferred amounts.
"Employees are going to see a reduced net salary in 2021 that is more or less equal to the increase they will enjoy in the coming months if they accept this postponement," Peter Isberg, vice president of the human resources company, told Telemundo's sister network CNBC. ADP.
[IRS defer payment of taxes for three months]
Trump's executive order applies to the employee's share and affects workers whose wages are less than $ 104,000 a year.
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Typically, employees and employers each pay half of the total 12.4% Social Security tax.
Under the executive order, employers can choose to refrain from retaining 6.2% of employees, but must continue to contribute their own share for each worker.
critics
Last month, the House of Representatives (under Democratic control) and more than 30 business groups signed a letter expressing frustration at the vague guidance on the measure, urging the White House and Congress to forgive the deferred taxes.
Trump ordered the tax deferral in early August after the latest pandemic aid package stalled in Congress.
The impact on workers' net wages could be significant.
A minimum wage employee who works full time and earns about $ 580 a fortnight would lose about half of their pay if all tax-deferred were paid at once.
[This IRS website helps those who did not file taxes but are eligible to receive aid checks]
"He's underfunding Social Security and breaking his promise, he's looking at our faces," said Conneticut Democratic Rep. John Larson, who chairs a subcommittee that oversees the program.
Democratic presidential candidate Joe Biden has joined the criticism.
Unknowns
It is not clear what will happen to temporary employees and other workers whose employment may end before the end of the year.
It's unclear how Trump plans to fund Social Security without payroll taxes.
Without a new source of funding for Social Security, the fund could be exhausted by mid-2023, according to a recent letter from Stephen Goss, the chief actuary of Social Security, to Senate Democrats.
Neil Bradley, chief of policy for the Chamber of Commerce, said the Treasury Department's guidance leaves many practical questions unanswered.
However, "it makes it clear that employees will have to pay more taxes starting in January to offset any benefits they receive now," Bradley said, "the only way to achieve a viable proposal is for Congress and the Administration to come together and enact a change in law. "
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Although the president has promised to eliminate the tax if he is reelected, an act of Congress would be required to eliminate the liability entirely.
"At the end of the year, assuming I win, I'm going to end the payroll tax, which is something else some of the great economists would like to see done," Trump said earlier this month, adding that the The country's "tremendous growth" will cover the costs of Social Security.
"We will pay Social Security through the general fund," he concluded.
Additionally, a payroll tax deferral benefits those who work, not the unemployed who are left without a $ 600 weekly benefit from the federal government that has expired.
The last time citizens received a payroll tax cut was in 2011, when the Obama Administration cut the employee payroll tax by 2%.
The unemployment rate for that year, after the Great Recession, remained in the 9% range.
With information from The Associated Press, CNBC and Forbes.
