Washington - President Donald Trump confirmed yesterday that he is exploring a reduction on the payroll tax employees pay to Social Security, aiming at bringing more money to their paychecks and boosting the U.S. economy.
After the White House denied discussions surrounding the proposal, Trump accepted that there are conversations over this issue, just as experts fear an economic recession.
During the administration of President Barack Obama, Congress approved a 2 percent reduction - from 6.2 percent to 4.2 percent - in the payroll deduction for Social Security, which guaranteed on average more than $500 a year to Puerto Rico residents between 2011 and 2012.
To avoid limiting future Social Security benefits, the Obama administration redirected other funds to Social Security.
Faced with the island's fiscal crisis, in 2016, the Congressional Task Force on Economic Growth in Puerto Rico recommended the measure again.
That type of proposal takes money "out of another pocket," said economist José Alameda, a professor at the Mayagüez University Campus (RUM, Spanish acronym), pointing out that if legislation is introduced, it will be important to know how it will be financed.
White House discussions on this proposal could be an acknowledgment that Trump's government has gone too far with the imposition of trade tariffs, and mainly their effect on imports from China, according to Alameda.
Initially, the White House denied discussions on payroll tax reductions.
However, during a meeting with Romanian President Klaus Iohannis, President Trump confirmed that discussions are underway. "Payroll tax is something that we think about, and a lot of people would like to see that," Trump said.
Trump has minimized experts’ forecasts warning of a downturn in the economy and fearing that the United States is nearing a recession.
Workers pay a 6.2 percent tax on the first $132,900 of their income. Employers pay another 6.2 percent.
Payroll taxes finance Social Security and Medicare programs.
So far, there are no details about the proposal the White House is discussing nor has the Congress leadership been consulted.