Pictured President and CEO of the South Carolina Small Business Chamber of Commerce.
President Trump signed an Executive Orders to defer payroll taxes for employees through December 31, 2020. Below is a statement of Frank Knapp Jr, President and CEO of the South Carolina Small Business Chamber of Commerce.
Columbia, SC. –President Trump has shifted responsibility for providing economic stimulus from himself and Congress to small business owners.
The payroll tax deferral is a minefield for the small business owner. While we do not know if small business owners will be mandated not to collect payroll taxes from workers or businesses will be able to make their own decision on the issue, there will be negative consequences for the employer either way.
First, small business owners deferring payroll tax collection, either voluntarily or mandatorily, will be responsible for collecting any deferred payroll taxes from workers in January thus reducing employees’ normal take home pay significantly at that time. Employees will likely blame the small business owner for their reduced payroll checks resulting in employee dissatisfaction, loss of productivity and worker turnover.
Second, if workers are allowed to make the decision whether or not to have their payroll taxes deferred, the burden will be on the small business owner to try to inform them of the negative consequences come January. On the other hand, should the employers be able to decide whether to participate in the payroll tax deferral, they are surely going to suffer the dissatisfaction of the workers not agreeing with the decision. If the decision is not to participate, workers wanting a bigger paycheck now will be dissatisfied. If the decision is to participate, workers not wanting to pay all the deferred taxes in January will be dissatisfied. Employee dissatisfaction in either case will harm productivity and might create worker turnover.
Third, if an employee of a business participating in deferred payroll taxes decides to change jobs in December in order not to have to pay the deferred payroll taxes, the burden of collecting those deferred payroll taxes will fall on their new employer causing worker dissatisfaction with that business.
Fourth, none of the President’s Executive Orders would continue the federal programs needed for financial relief, either in the form of loans or grants, that millions of small businesses need to survive.