President Trump’s proposed executive order delaying the collection of payroll taxes is an awful idea. It would be bad policy, and it also would be of dubious legality.
What Trump proposes isn’t a tax cut — he has no authority to do that without a law duly passed by Congress. Instead, he proposes merely postponing the collection of the tax that funds Social Security and Medicare.
This means that when the postponement period runs out, employees will still be liable for the back tax payments in addition to beginning to pay their current payroll levies (or, with what amounts to the same thing, the employer will need to withhold twice the amount until the back taxes are paid). This isn’t relief; it’s merely a false reprieve that will hit workers with a double whammy after the election. On that front alone, it’s a horrid idea.
It’s also a bad idea because on a macroeconomic level, the double whammy would arrive just when we all hope the economy, perhaps helped by a vaccine coming into early use by then, will be ready to move back into high gear after the coronavirus-induced slowdown. Few things would do more to cause a double-dip of economic doldrums than doubled payroll taxes just when a recovery is in sight.
Finally, Trump’s legal and constitutional authority to do this is dubious. He must assert emergency powers related to an officially declared federal disaster. Without getting bogged down in cross-referencing the laws pertaining to disasters, suffice it to say that the idea of delayed tax-payment requirements rather obviously was intended to apply only in situations in which the destruction of infrastructure makes payment physically difficult or impossible.
Nothing prevents working taxpayers from forwarding their payroll taxes to the IRS. With Congress still meeting, nothing justifies a presidential end-run around the usual lawmaking process. The entire trend toward bypassing the ordinary lawmaking process in favor of unilateral presidential authority is a worrisome one, fraught with constitutional danger. Conservatives especially should be wary of it: It is conservatives who usually distrust the accumulation and centralization of power in fewer hands.
Indeed, conservatives erupted when President Barack Obama said he would rule with only a “pen and … a phone.” They were right to do so in terms of constitutional theory and two centuries of American practice. And practically speaking, they should be wary of setting further precedent for presidential superauthority that a future President Joe Biden might further abuse.
In sum, Trump’s proposal would be a cheap trick if it weren’t an economically and constitutionally dangerous one. He should not act on it.
