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NPRC letter in National Journal's Congress Daily
Issue date: November 20, 2001
Payroll Experts Advise Caution On Tax Holiday Plan
Payroll administrators cautioned today that a month-long reprieve from payroll taxes, offered by Senate Budget ranking member Pete Domenici, R-N.M., as an approach to getting money in people's hands to stimulate the economy, might be more complicated than expected. As Congress struggles to free itself from an impasse on an economic stimulus bill, Domenici has suggested giving all workers and employers a one-month break from the 6.2 percent payroll tax. An aide said the change could happen quickly, as payroll administrators would need only to "tweak" payroll computer programs for a brief time. The money lost to the entitlement trust funds would be made up from general fund money.
But an analysis today by the American Payroll Association, the American Society of Payroll Management, the National Payroll Reporting Consortium and the Society for Human Resource Management, indicates it might not be that simple. The groups warned it could take as long as six months for the public and private sector to modify and test computer software and alter government tax forms - especially since payroll departments already will be busy with the usual end-of-year tasks. A spokesman for the one of the groups emphasized that the analysis is technical - not political - in nature.
"The undersigned organizations are all very supportive of congressional efforts to pass an economic stimulus package, even if some administrative inconveniences result," said the statement. "This proposal, however, would create administrative problems that go far beyond inconvenience. Because more than several months would be necessary to ensure successful implementation, its primary purpose of near-term economic stimulus would not be achieved."
The tax holiday applies to all employees and all employers who would otherwise be liable for Social Security (OASDI) tax.