Mr. President, tear down this tax deferral plan!

The worst thing about a colonoscopy is the prep. Specifically, drinking large quantities of a gross-tasting liquid the day before. You face a dilemma: Sip from time to time, or gulp each dose all at once and hope you don’t gag. Either way, there’s no escape. You’ve got to get it all down the hatch.

Osmotic laxative is analogous to taxes. You’ve gotta pay ’em. If you work, typically at least three layers of government, sometimes four, collectively take a big double digit chunk of your earnings. Payroll deductions are like the sippy method of colonoscopy prep cocktails. When the end of the year comes, if you’ve calculated your deductions properly you come out clean with the city, county, state and federal governments.

Now, if the doc told you, you could skip a round of prep drink you’d say, “Great!” But if she then said you’ve got to drink double later, you’d probably go ahead and just imbibe the stuff on schedule.

That, in a plastic beaker, is what’s going on with the weird payroll tax deferral about to hit federal employees. It stems from a Trump administration memorandum from August 8th. The order is a somewhat convoluted thing, even from this supportive bulletin from Republican members of the House Ways and Means Committee.

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Tax relief can give a boost to family incomes. If people have more to spend, it can help the economy. But for Pete’s sake, not if the taxes are simply deferred, only to require repayment a few months later. Or am I missing something?

The memorandum did include this intriguing sentence on tax forgiveness: “The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.” But that idea is wrapped up in a tangle of competing stimulus and pandemic relief proposals that Congress probably won’t pass this year because the two sides are so far apart.

Plus, the specific tax subject to deferral is that specified in 26 U.S.C. 3101(a) — the Social Security tax. Show me a Congress that would agree to forgive even three months of payroll taxes headed to the Social Security funds, accounting exercise though they might be, and I’ll show you the herd of unicorns in my back yard.

In the meantime, absent a general tax rebate, it appears that only federal employees — including members of the military — are subject to the deferral. Federal News Network’s Nicole Ogrysko has reported extensively on this plan. A recurring question is whether you can opt out of the deferral. So far the answer is no. The top personnel person at the IRS told employees there she’d checked with Treasury, which confirmed the non-opt-out policy.

Bloomberg has reported that organizations may opt out of the deferral plan. But in the federal implementation, there’s no individual opt-out.

That’s prompted a gaggle of House members to urge administration officials — starting with Treasury Secretary Steve Mnuchin — to provide an opt out. They echoed a days-earlier letter from a group of Democratic senators.

I’m scratching my head trying to understand how anyone could see this as stimulative. As Nicole reported, the Sergeant Major of the Army, Michael Grinston, tweeted to soldiers to simply set aside the “windfall” so they’ll be able to repay it later. Similar advice went out to Air Force members. I’d note that even if the Defense Finance and Accounting Service increases automatic deductions in case people spend their windfall, service members seeing larger paychecks now will see correspondingly smaller ones next year.

In fact this plan doesn’t save anybody a dollar, and it requires expensive and temporary reprogramming of payroll systems. And employers have the burden of re-collecting the deferred taxes. What a mess. I find it telling that no large private employer has opted in for this. At least I haven’t been able to find one.

President Trump has been known to float ideas and then change his mind. On the deferral, though, he launched a memorandum which in turn cranked up an apparatus. But it doesn’t have much momentum, given that only the federal government is taking up the idea. The federal payroll providers are prepared to start the deduction with your next paycheck. They can also put it all back together.

Here’s an alternate plan. Cancel the deferral plan. Whatever money has been deducted before the tractor is reversed, let people keep it and make an adjustment to next year’s scheduled pay hikes.

Mr. President, please do your federal career employees a favor and change your mind on this one.

Nearly Useless Factoid

By: Alazar Moges

We all know the late Bob Ross as the soft-spoken painter with a signature look. But did you know that his love for painting began during his time in the Air Force. Ross took painting classes while he was stationed in Alaska, a landscape that often served as inspiration in his art.

Source: Orlando Sentinel