Law in the Marketplace: Will Trump’s new coronavirus measures help economic victims?

For the Monitor
Published: 8/15/2020 3:15:12 PM

Because of the coronavirus pandemic, America currently faces massive economic challenges, for which it needs urgent and massive federal relief. However, at this writing, Republicans and Democrats are deadlocked about that relief, and there is no compromise in sight.

To respond to this deadlock, President Trump on Aug. 8 took four executive actions in the form of three memoranda and an executive order, which he promised would provide substantial interim economic relief for four major classes of beneficiaries —namely:

-- employees obligated to pay quarterly federal payroll taxes on their employment compensation.

-- students owing payments of principal on student debt.

-- unemployed persons whose $600 weekly federal contributions of unemployment compensation terminated on July 25.

-- individuals and families who rent their places of residence.

I wish I could say in this column that President Trump’s actions will provide the relief he has promised. Regrettably, however, many authorities, not only on the left but also in the middle and on the right, view the president’s actions as valueless. If they are right, then, until Congress finally acts, the four groups listed above will have no relief.

Here’s why.

>BodySubhead<Employees

The president has authorized employers to defer the withholding and payment of the quarterly federal payroll taxes that their employees owe on their employment compensation.

However, many employers may be hesitant to take advantage of this deferral because of its unclear longer-term federal tax consequence. And even if employers do take advantage of the deferral, many of them will not pay their employees the amounts thus deferred; instead, they will escrow these amounts. Furthermore, the constitutionality of the president’s deferral authorization is subject to serious legal challenge.

>BodySubhead<The unemployed

Retroactive to Aug. 1, Trump wants the federal government to contribute $300 of the $400 payment of unemployment compensation that would replace the above $600 payments. However, it appears that in order for the federal government to make these payments in any state, that state must itself make weekly payments of $100. However, few, if any, states can afford these payments, and even if they can afford them, making the necessary logistical arrangements will be exceedingly complex and time-consuming.

>BodySubhead<Students

While President Trump has proposed to extend to Dec. 31, 2020, the right of students to defer student loan payments of principal — a right due to expire at the end of September — this presidential action by its terms will provide students with only a brief financial respite, and the respite will be available only for loans held by the federal Department of Education. Many lenders of student loans are private, not federal.

>BodySubhead<Tenants

Although the president has stated that under his executive order concerning evictions, “we are stopping evictions; we are not letting people be evicted,” his order merely recommends to the relevant federal agencies that they consider preventing these evictions. It does not say they must do so, it does not suggest how they should do so, nor does it state whether landlords should receive some form of relief. Whether there is a lawful answer to any of these questions is doubtful. For the 40 million Americans currently facing eviction, the order will very likely provide no relief.

>BodySubhead<The bottom line

In short, for the terrible economic disasters currently threatening hundreds of millions of Americans, the only real relief must come from Congress.

(John Cunningham is a Concord tax and business lawyer. He has published “Limited Liability Company Operating Agreements” and “Maximizing Pass-Through Deductions under Internal Revenue Code Section 199A.” Both are the leading books in their fields.)




Concord Monitor Office

1 Monitor Drive
Concord,NH 03301
603-224-5301

 

© 2020 Concord Monitor
Terms & Conditions - Privacy Policy