Payroll Tax Deferral Likely Worth $1,200 per Worker - Kudlow

By Dana Cruz First Posted: Aug 09, 2020 10:55 PM EDT

President Donald Trump enacted the payroll tax deferral via executive order to save an average American worker about $1,200, said White House economic adviser Larry Kudlow on Sunday.

Kudlow said the amount from the payroll tax cut could rise to the said amount over four months starting September, a Fox Business report stated.

"I think it's going to be in a couple of weeks, and I think it's going to come to about $1,200 per person," Kudlow said in CNN's "State of the Union."

Trump had pushed the payroll tax cut for some time during the pandemic. And so, he included it in the four executive orders he signed this weekend.

A Gigantic Wage Increase?

Talking about the payroll tax, Kudlow explained that the government is giving some 140 million people who worked through the pandemic.

"They're heroes, we're giving them about a $1,200 wage increase after tax," he said. In a report from The Hill, Kudlow said the payroll tax deferment would give millions of working Americans "a gigantic wage increase."

On the other hand, Senate Democratic leader Chuck Schumer said in an interview on ABC's This Week that he believed the payroll tax cut is "way off-base." Schumer did not see the good effects of the payroll tax delay, as they are just that - deferral.

He said the tax cuts would accumulate until January, and employers will withhold the money because "they don't want their employees to be stuck with a huge bill in December."

According to Schumer, having the payroll tax cuts will only hurt the U.S. economy as it will not "pump money" into it.

How about the unemployed?

Kudlow said the increase could be an "incentive" for those who are working amid the pandemic to continue doing their jobs.

All the while, he did acknowledge that many Americans suffer from the loss of jobs amid the pandemic." There are roughly 15 million or 16 million unemployed. The unemployed is too high.

"There's a lot of heartbreak there," Kudlow said. The White House found a solution through unemployment assistance. With the aid, Kudlow hoped that the unemployed would see incentives to go back to work.

Other Executive Orders

Another part of the executive orders that Trump signed over the weekend is an extension of enhanced unemployment benefits. These benefits required the state to chip in 25 percent of the $400 boost.

The administration has not yet confirmed if all 50 U.S. states are on-board with the plan, Kudlow said. Based on their estimates, Kudlow said the states would likely be able to provide the extra $100 for the unemployment benefit.

He said the White House has been in touch with each state and would likely find out what to do by Monday.

"We have very good records coming out of the Treasury Department. But we will be in touch," he said.

Whether the president has the power to rewrite his role in the payroll, the tax law remains debatable, just as his power to sign the four executive orders remains in heat.

With this, Kudlow said: "Maybe we're going to go to court on them. We're going to go ahead with our actions anyway."