October 09, 2020

Van Hollen Announces Legislation to Make Payroll Tax Deferral Optional, Including for Military Members and Federal Employees

Today, U.S. Senator Chris Van Hollen (D-Md.) announced legislation to make the payroll tax deferral outlined by President Trump optional for any worker whose employer chooses to participate, including federal employees and service members. The legislation, which can be found here, is cosponsored by over 15 of the Senator’s colleagues. 

“President Trump is using federal employees and our troops as pawns in his payroll tax scheme, and it’s unacceptable. During this time of heightened uncertainty, our public servants deserve the ability to choose what makes most sense for them and for their pocketbooks. That’s why the President’s payroll tax deferral must be made optional. Since this move has been described as ‘reasonable’ by President Trump’s own Treasury Secretary, I urge the Congress to act quickly on this commonsense measure,” said Senator Van Hollen. 

In addition to this legislation, Senator Van Hollen has repeatedly pressed Treasury Secretary Steven Mnuchin and Office of Management and Budget Director Russell Vought on this issue. During a recent Banking Committee hearing, in response to questioning from Senator Van Hollen, Mnuchin stated that it would be “reasonable” to allow federal employees and members of the military to choose whether or not to participate. In a letter sent on October 2, the Senator followed up with Mnuchin and Vought on these remarks. Senator Van Hollen also previously led a bipartisan letter, signed by over 20 Senators, to both Mnuchin and Vought in early September. 

This legislation is cosponsored by Senators Ron Wyden (D-Ore.), Mark Warner (D-Va.), Ed Markey (D-Mass.), Elizabeth Warren (D-Mass.), Michael Bennet (D-Colo.), Kyrsten Sinema (D-Ariz.), Ben Cardin (D-Md.), Jack Reed (D-R.I.), Tim Kaine (D-Va.), Richard Blumenthal (D-Conn.), Sheldon Whitehouse (D-R.I.), Mazie Hirono (D-Hawaii), Dick Durbin (D-Ill.), Joe Manchin (D-W.Va.), Patty Murray (D-Wash.), and Dianne Feinstein (D-Calif.). 

The legislation is supported by a number of organizations, including: the American Federation of Government Employees, the National Treasury Employees Union, the International Federation of Professional and Technical Engineers, the National Federation of Federal Employees, the Federal Employee Education and Assistance Fund, the Senior Executives Association, the Federal Managers Association, the Professional Managers Association, National Association of Assistant United States Attorneys, United Power Trades Organization, Antilles Consolidated Education Association, National Weather Service Employees Organization, Patent Office Professional Association, National Association of Government Employees, National Education Association, Social Security Works, Professional Aviation Safety Specialists, American Federation of State, County and Municipal Employees (AFSCME), Americans for Tax Fairness, and National Active and Retired Federal Employees Association. 

“The President’s payroll tax deferral scheme is nothing more than a scam on hardworking federal employees – making their paychecks look bigger until the end the of the year when they’ll be hit with a surprise increase in their payroll taxes right after the holidays,” said Everett Kelley, National President, American Federation of Government Employees. “We wholeheartedly support Senator Van Hollen’s bill to protect federal employees from this unwelcome surprise by requiring their written consent before their payroll taxes can be deferred.” 

“This payroll tax deferral plan simply amounts to a temporary loan program and federal employees deserve to choose whether they want to participate, which is why we strongly endorse Sen. Van Hollen’s legislation. The Protecting Employees from Surprise Taxes Act would allow federal employees to opt out of this gimmick and protect themselves from the burdens of higher taxes and smaller paychecks starting in January. Federal employees who want to participate in the deferral would be able to continue doing so, which is how the federal government should have structured the program in the first place,” said Tony Reardon, President, National Treasury Employees Union. 

“The federal government – or any employer – should not force its employees to take on debt through deferred payroll taxes that must be repaid next year. This bill would give employees the choice, placing the decision-making authority in the hands of the individual affected, where it ought to be,” said Ken Thomas, National President, National Active and Retired Federal Employees Association. 

“FMA argues that federal employees deserve to be allowed to choose whether to accept the payroll tax deferral or not. The lack of choice on this issue, and refusal to allow feds to choose how they want to pay their payroll taxes, hurts them rather than helping them. We commend Senator Van Hollen for his leadership and are proud to endorse the Protecting Employees from Surprise Taxes Act,” said Craig Carter, President, Federal Managers Association. 

“On behalf of the employees PASS represents at the Federal Aviation Administration and Department of Defense, I thank Sen. Van Hollen and his colleagues for their efforts to let all federal workers decide for themselves if they want to defer some of their taxes. They are in the best position to judge whether their family is in need of what amounts to a temporary loan that needs to be paid back,” said Mike Perrone, National President, Professional Aviation Safety Specialists, AFL-CIO. 

“Donald Trump's unilateral ‘payroll tax deferral’ is the first step in his plan to defund and destroy our Social Security system. His plan puts workers in a terrible bind. Either they'll be hit with a sudden tax bill next year, at a time when millions are living paycheck to paycheck. Or, Social Security will be deprived of dedicated revenue in the middle of a recession, putting workers' earned benefits in jeopardy. Most private sector employers have already opted not to participate in Trump's scheme, so now Trump is trying to use federal workers and our troops as guinea pigs. This bill would give everyone the opportunity to opt out. We thank Senator Van Hollen and his colleagues for fighting for workers, and enthusiastically endorse their legislation,” said Alex Lawson, Executive Director, Social Security Works.