By Hailey Hensley
Rider has chosen not to move forward with the payroll tax deferral that the Trump administration offered businesses for the remainder of 2020, a move made in an August executive order.
According to the Sept. 14 announcement that was quietly posted on the Rider Human Resources website, the university felt that taking the optional tax break may place an undue burden on university employees in 2021.
The announcement states that “…after hearing from some employees, the University believes that the Executive Order has the potential to place a substantial financial burden on employees at the end of the deferral period causing a decrease in net pay for the first four months of 2021.”
There is also existing uncertainty about who will be responsible for paying the deferred taxes and how those taxes will be collected if the university chooses to utilize the delay.
By not opting into the optional program, the university will prevent employee tax rates from doubling for the first four months of 2021. The social security tax would go from 6.2% to 12.4% from January to April next year.
The executive order, issued on Aug. 8 states that “…while the Department of the Treasury has already undertaken historic efforts to alleviate the hardships of our citizens, it is clear that further temporary relief is necessary to support working Americans during these challenging times. To that end, today I [President Trump] am directing the Secretary of the Treasury to use his authority to defer certain payroll tax obligations with respect to the American workers most in need.”
The order explains that this tax deferral is only available to employees who make around $8,000 a month or less, meaning that even if the university was to implement the tax cut, the university’s top earners would not qualify.
Director of the Rebovich Institute for New Jersey Politics Micah Rasmussen stated that “President Trump’s executive order on the deferment of payroll taxes was meant to be an alternative to a new round of stimulus … It wound up being pretty limited in effectiveness– to be helpful, a worker would need to have a temporary reason to use the money, but then be ready to repay it in full next year. Critics have called it a payday loan you didn’t ask for.”
The announcement by the university is concluded by simply stating that “…for this [the uncertainty and undue financial burden] and other reasons, the University will not be implementing this optional program.”