President Donald Trump addressed the possibility Tuesday during a White House press briefing of sending out a second round of additional stimulus checks amid the ongoing coronavirus pandemic and economic windfall across the country that has accompanied it. Replying to a comment about a second round of checks, the president said that he likes "the idea of payroll tax cuts" as opposed to stimulus checks. But what does that mean exactly? And, more specifically, what does it mean for Social Security and Medicare?
A payroll tax cut could impact funding to both Medicare and Social Security, according to CNBC, because both Medicare and Social Security rely on payroll taxes for funding — and they are also reportedly facing possible funding shortfalls amid the pandemic. The outlet noted that it is currently unclear how the Trump administration could implement a payroll tax cut. Additionally, it's unclear exactly how a potential cut would affect levies for Social Security and/or Medicare.
As of right now, employees and employers are subject to a 6.2 percent tax for Social Security and 1.45 percent for Medicare. For self-employed Americans, they are subject to pay these tax contributions on their own, 12.4 percent for Social Security and 2.9 percent for Medicare. All of these contributions from workers help keep both Medicare and Social Security going. If a payroll tax cut is implemented, it is unclear how they would be able to fund those programs, as they are already feeling the effects of the coronavirus crisis. According to Howard Gleckman, a senior fellow at the Urban Institute, a non-partisan Washington, D.C., think tank, the United States will have to figure out a way to help both of those organizations replenish their funds if a payroll tax cut is indeed put into effect.
The news of the president mulling over the idea of a payroll tax cut comes a month after the White House and Congress agreed to a $2 trillion stimulus package to help give a boost to the economy amidst this health crisis. Their package entailed that eligible Americans would receive a $1,200 check (or a check for $2,400 for couples filing a joint tax return). Recently, another piece of legislation, the Emergency Money for the People Act, was introduced that would possibly grant Americans additional payments of up to $2,000 over the course of several months.
The Emergency Money for the People Act was introduced by Rep. Tim Ryan of Ohio and Rep. Ro Khanna of California. It would entail that eligible Americans would receive a check of up to $2,000 over the course of at least six months, or until employment levels are back to what they were before this pandemic began. Under their act, all Americans who make under $130,000 would be eligible to receive payment.