Tatishka Thomas is getting a pay bump. She’s not happy about it.
The temporary raise is coming courtesy of a new payroll tax deferral, created via an August executive order by President Donald Trump, which has just started showing up on federal workers' paychecks.
The deferral will restore the 6.2 percent of Thomas’ salary that’s normally withheld to fund Social Security from now through Dec. 31. Come January, that tax will be not just restored, but doubled to cover the deferral — meaning her temporary raise will, in just a few months, become a temporary pay cut.
“I’m upset about it. Let me have my taxes taken out how they’re supposed to be taken out,” said Thomas, a medical coder at the Bay Pines VA Healthcare System in St. Petersburg, and the president of the American Federation of Government Employees union Local 548. “How is this really a benefit, frankly, when I’m going to be giving back even more money at the beginning of the year?
“I haven’t ran across one person yet who said they would have actually preferred to do it.”
That’s the prevailing opinion among employers, too. While the payroll tax deferral is mandated for many federal agencies, including the military, most other employers, public and private, have opted out, saying the benefits are unclear — and the burdens potentially onerous.
“You’re not really getting a break. You’re just getting kind of a vacation,” said Julie Smith Moore, senior tax manager at Spoor Bunch Franz in St. Petersburg. “When you come back from vacation, there’s still all the work that you had to do while you were on vacation, plus what you would normally be doing. It’s similar to that.”
It’s possible that in the coming months, the government could turn the deferral into a full holiday (although a plan that permanently displaces Social Security funding might not gain traction before an election). Otherwise, employees who are affected should plan to set aside some money to make up for the coming shortfall.
Trump’s order only applies to employees' share of the payroll tax (and then, only for employees making below a certain threshhold, generally $4,000 per biweekly pay period). There’s also an employer’s share, and under the Coronavirus Aid, Relief and Economic Security (CARES) Act, companies have been allowed to defer that portion since March. SeaWorld, Kforce and Bloomin' Brands are among the Florida companies who have deferred millions through this provision, according to financial disclosures.
Large Tampa Bay employers like Publix, BayCare Health System, Jabil, Tech Data and Mosaic all said this week that they’re not participating in the employee payroll tax deferral.
Spokeswoman Michelle Smith said in an email that Jabil opted out of the program to “avoid potential hardship to our employees and mitigate the potential for payroll tax exposure."
Outback Steakhouse parent Bloomin' Brands — which as of June had deferred $16.9 million in employer payroll taxes — said in a statement that it opted out of the employee portion of the deferral due to the plan’s lack of specifics.
“We appreciate what the executive order was trying to accomplish, but due to the ambiguity of the potential repayment in 2021, the deferral may create more burden than relief," the statement read. "We are maintaining our current payroll practices.”
Deferring taxes could be a logistical headache, Moore said. The Internal Revenue Service has not yet clarified how deferred money will be classified on next year’s tax forms — or whether the brief raises will be taxed just like regular income. And if an employee leaves their job this year, the company is still on the hook for recouping those deferred tax payments in 2021.
“If you are a huge company with hundreds of employees and you elect into this, and either you lay people off or people quit, you’re still liable to try and collect from them,” Moore said. “That’s a huge administrative burden.”
Even among the federal government’s workforce of 4.3 million, there are discrepancies in how the deferral is being used.
All executive branch agencies are required to participate, although at least one independent federal agency, the U.S. Postal Service, has opted out. The smaller legislative and judicial branches have more leeway. The U.S. Senate, House of Representatives and Supreme Court all do not plan to participate.
Local governments, which employ tens of thousands of workers, are not participating. That includes Hillsborough, Pasco and Pinellas counties; as well as the cities of Tampa, St. Petersburg and Clearwater.
“There are too many unanswered questions and too much risk to employees and the employer per repayment of the deferral,” said Clearwater communications director Joelle Castelli.
Addressing the deferral at a roundtable with Florida veterans in Tampa this week, Joe Biden called it “not a bad idea, theoretically,” but said that those it affects need to remember that the bill will soon come due. And if they’re not prepared, he said, “it’s going to be chaos.”
“I doubt people are going to take that money and be able to put it away in savings, because they have such urgent needs,” Biden said. “You’ve got to know that, ‘God, that’s a little bit more money every paycheck from the military, but I’m going to have to double it going back.'"
Elena McCullough, the Wesley Chapel Coast Guard veteran whose question prompted Biden’s answer, called the tax deferral “disastrous." She said she’s concerned it could become permanent, threatening the Social Security she’s counting on.
“After we did all the work that we had to do so that we could have a good retirement, I’m concerned about the money that we contributed,” said McCullough, 59, the vice president of the Democratic Veterans Caucus of Florida. “I just want to make sure that what is ours really comes to us.”
Thomas, whose union has endorsed Biden, said she’s encouraging federal employees to make sure they know exactly what they’ll owe in the new year, so that a program designed to help workers doesn’t end up hurting them.
“Save it, because you will have to give it back," she said. "And we don’t know what the ramifications are going to be once it’s time to give it back.”
Times staff writer Ileana Najarro contributed to this report.
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