With proposed relief legislation at a total standstill in Congress, on Saturday President Trump signed an executive order and three memorandums to provide relief amidst the COVID-19 pandemic. The directives seek to temporarily halt payroll tax collection, decrease additional unemployment aid to $400 per week while extending the additional aid through the end of 2020, evaluate the potential need for an eviction ban, and defer student loan payments through the end of 2020.
Payroll Tax Deferral
The President’s payroll tax memorandum instructs the United States Treasury to halt the collection of payroll taxes from September 1 through December 31, 2020, for workers who earn less than $4,000 every two weeks (about $104,000 per year). Workers will see an increase in the size of their paycheck, but it is important to stress that this is not a tax cut, but rather a tax deferral, meaning the taxes will still be due at a later date. The President acknowledges that he does not have the power to cut taxes on his own and has called on Congress to make this deferral a permanent cut.
Unemployment Aid Extended at $400
Congress previously increased unemployment aid by an additional $600 per week as a result of the CARES Act. The President’s unemployment aid memorandum calls for the extension of the additional assistance at a decreased amount of $400 per week through December 6, 2020, or until funding runs out. Additionally, Trump’s memorandum asks for $44 billion of funding for the Department of Homeland Security’s Disaster Relief Fund to be used to fund the extension. The federal government would cover $300 of every $400 with state governments kicking in the other $100.
Potential Eviction Ban
The President’s executive order calls on the Secretary of Health and Human Services and the Centers for Disease Control and Prevention to “consider” the potential need for a nationwide eviction ban during the pandemic.
Student Loan Payment Deferral
The President’s memorandum waives all student loan interest on loans held by the federal government through the end of 2020 and allows delayed payments until December 31, 2020. Principal payments are due on December 31, 2020, and full payments will resume on January 1, 2021.
It is important to stress that the ability to tax and spend public money for the national government belongs to Congress. It is expected that these actions will receive challenges in court. We will provide additional updates as more information becomes available.
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