Bill Overview
Title: Pandemic Payroll Tax Suspension Act
Description: This bill suspends payroll taxes (i.e., employment and self-employment taxes) in 2021 and 2022. The bill requires the transfer of funds from the Treasury to the Old-Age and Survivors Trust Fund, the Disability Trust Fund, and the Social Security Equivalent Benefit Account to compensate for the reduction in revenues resulting from the suspension of taxes under this bill.
Sponsors: Rep. Gosar, Paul A. [R-AZ-4]
Target Audience
Population: Employed and Self-Employed Individuals Worldwide
Estimated Size: 160000000
- Payroll taxes are typically paid by both employees and employers, affecting the entire workforce.
- Suspending payroll taxes would directly impact individuals who are currently employed or self-employed, as it relates to withholding taxes from their income.
- The bill covers the fiscal years 2021 and 2022, suggesting its impact on the workforce during this period.
- The Old-Age and Survivors Trust Fund and the Disability Trust Fund are mechanisms within the US Social Security system, which means the impact is primarily on individuals in the United States.
- The suspension would affect how much individuals contribute to their social security benefits via these taxes. Potentially, it could temporarily increase disposable income of workers and reduce business tax liabilities.
Reasoning
- Payroll tax suspension is relevant for all currently employed individuals as it directly affects their immediate take-home income by reducing tax deductions from their paycheck.
- Self-employed individuals are also affected as they pay the entirety of payroll taxes themselves.
- High-income earners might see a larger absolute benefit due to higher salaries, but while the proportional benefit remains the same across income levels, the impact on low to moderate income individuals could be felt more significantly in day-to-day lifestyle.
- Funding reallocation to the Social Security funds shows a clear intent to protect future benefits, putting long-term stability concerns at ease for some citizens.
- Different demographics and industries within the US workforce will experience different effects depending on their employment status, existing financial health, and reliance on social security benefits.
Simulated Interviews
Software Engineer (New York, NY)
Age: 28 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 10/20
Statement of Opinion:
- The tax suspension increases my disposable income.
- Though helpful, I'm concerned about long-term social security implications.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Auto Mechanic (Detroit, MI)
Age: 52 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 8/20
Statement of Opinion:
- Reducing taxes is a big relief in my monthly budget.
- I worry about underfunding for social security.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 4 |
Freelance Graphic Designer (San Francisco, CA)
Age: 37 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 5/20
Statement of Opinion:
- I appreciate paying less in taxes, but I'm aware this is temporary.
- The savings help cushion inconsistent income as a freelancer.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Small Business Owner (Austin, TX)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 6/20
Statement of Opinion:
- The suspension helps with cash flow and payroll during uncertain times.
- I'm concerned about future employee benefits and tax adjustments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 5 | 5 |
Registered Nurse (Miami, FL)
Age: 30 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 9/20
Statement of Opinion:
- The extra income aids with mortgage payments.
- I'm monitoring the government's promises about no future benefit cuts.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Teacher (Chicago, IL)
Age: 40 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 7/20
Statement of Opinion:
- This policy helps by lifting some financial stress in the short term.
- Thinking about longer-term effects on my retirement savings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 4 |
Construction Worker (Seattle, WA)
Age: 34 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 6/20
Statement of Opinion:
- The enhanced take-home pay is critical as my family grows.
- Concern over reduced funding for future unemployment benefits.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 5 | 5 |
Part-time Consultant (Philadelphia, PA)
Age: 62 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 4/20
Statement of Opinion:
- Extra income helps with medical expenses, though I'm close to social security draw.
- Minimal concern since I'm near retirement age.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Bartender (Las Vegas, NV)
Age: 29 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 8/20
Statement of Opinion:
- I welcome any additional funds to manage rent and expenses.
- Saving up during these two years seems essential as benefits might be reduced later.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 4 | 4 |
| Year 20 | 4 | 4 |
Self-employed Farmer (Rural Alabama)
Age: 59 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 5/20
Statement of Opinion:
- Help in reducing tax burden is greatly appreciated due to uncertain harvests.
- Rural social programs must remain funded to avoid community decline.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 4 |
Cost Estimates
Year 1: $620000000000 (Low: $600000000000, High: $640000000000)
Year 2: $640000000000 (Low: $620000000000, High: $660000000000)
Year 3: $0 (Low: $0, High: $0)
Year 5: $0 (Low: $0, High: $0)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- Ensuring the sustainability of Social Security funds during the suspension period will require significant support from the U.S. Treasury.
- A broader economic impact should be considered due to increases in disposable income which could affect inflation and demand.
- Long-term impacts to Social Security trust funds must be evaluated, considering the temporary nature of the tax suspension.