Payroll tax holiday won’t be included in next stimulus package, Treasury chief says

A payroll tax holiday sought by President Trump won’t be in the next stimulus package, but may be in follow-up virus relief legislation, Treasury Secretary Steven T. Mnuchin said.

“It won’t be in the base bill but as we know, this is CARES 4.0, there could be CARES 5.0,” he said in a CNBC interview Thursday.

His comments mark an about-face by the administration. Earlier this week, Trump had said he would reject any stimulus legislation if it didn’t include the tax holiday.

“I would consider not signing it if we don’t have a payroll tax cut,” Trump told Fox News in an interview that aired Sunday.

In dropping the idea, the administration is acknowledging the idea has little support in Congress. Senate Republicans had been mostly dismissive and Democrats in both chambers opposed another broad-based tax cut. The next chance for another stimulus bill could come in late September when Congress and Trump will need to agree on a spending bill to avert an Oct. 1 government shutdown.

Resolving the payroll tax dispute clears a major hurdle for the GOP-led Senate, increasing the chances that Majority Leader Mitch McConnell (R-Ky.) can release a plan as soon as Thursday. The release of the plan would be the first step in talks with Democrats for the next stimulus.

Politics

What happens to the U.S. economy if the $600 federal unemployment benefit ends?

With the $600 boost about to end, Congress must decide whether to let it die, continue it, or cut back the payment levels.

July 22, 2020

The package will include a collection of bills that would represent the Republican counteroffer to the $3.5-trillion plan that Democrats passed in the House.

McConnell is aiming for the bills to total $1 trillion in spending. He and administration officials have struggled to reconcile differences among Republicans on the size and scope of additional stimulus to follow up the $2.9-trillion tranche of federal money approved previously that’s been supporting the economy through the coronavirus pandemic.

Trump has not given up on the idea, according to top White House economic advisor Larry Kudlow.

“The president still supports a payroll tax cut — a payroll tax holiday,” Kudlow said Thursday on Fox Business News, calling it “an inducement to come back to work.”