What is a payroll tax cut and how much money would it mean to you
A month after the economy shed more than 20 million jobs, the U.S. saw the biggest one-month jobs surge since 1939. The Labor Department said that the US added 2.5 million in May. The leisure and hospitality industries performed better as expected, as restaurants and bars rehired workers while states started to reopen their economies.
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At a press conference in the Rose Garden on Friday, President Donald Trump said he would like to see a payroll tax cut to help the American economy to continue to recover from the shutdown caused by the pandemic.
A payroll tax is money taken out of each paycheck that you earn. That money goes to the federal government to fund the Social Security and Medicare programs.
The payroll tax is levied on the first $137,700 of earnings. If you make more than $200,000 a year, an additional 0.9%
Employers also pay payroll taxes: 6.2% for social security and 1.45% for medicare for each employee.
So let’s say if you make $15 an hour. If you work a 40-hour week, that would mean you would have an extra $45.90 a week, or $183.60 a month in your paycheck.
Donald Trump said that he will be pushing congress to include payroll tax cuts as a part of any stimulus plan that he would be willing to support, a measure that has muted support among lawmakers in Congress.
Some lawmakers have criticized the idea, saying people who are unemployed would not see any benefit from the cut. Others have suggested that Social Security and Medicare cannot afford to lose funding for several months.
However; Donald Trump did say that he would be asking for additional stimulus that will be far bigger and far better than what we have seen in this country.
Treasury Secretary Steven Mnuchin also said he believes that American people and businesses will need more financial help to recover from the Pandemic Lockdown.
Politics aside… What are your thoughts on a payroll tax cut for the remainder of the year? Comment below.
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