Former president Donald Trump pitched yet another idea meant to win over hourly workers that surprised his own advisers: Stop taxing overtime.<\/p>\n
\u201cWe will end all taxes on overtime. You know what that means?\u201d he said Thursday during a campaign stop in Arizona. \u201cThat gives people more of an incentive to work. It gives the companies, it\u2019s a lot easier to get the people. \u2026 It would be unbelievable. You\u2019ll get a whole new workforce by doing no taxes on overtime.\u201d<\/p>\n
Though no details were provided, the proposal marks the Republican presidential nominee\u2019s latest overture to low- and middle-income voters. Last month, he called on the federal government to carve out similar exemptions on tip earnings and on Social Security payments, regardless of income level.<\/p>\n
On Friday, economists questioned how it would work.<\/p>\n
\u201cIf you did not put any guardrails on this, it would be a huge revenue loser,\u201d said Brendan Duke, senior director for economic policy at the left-leaning Center for American Progress. Such a shift, he said, could lead employers to classify as much of a worker\u2019s wages as overtime as possible. \u201cAs long as you\u2019re not violating the federal minimum wage or the state minimum wage, it\u2019s off to the races.\u201d<\/p>\n
One of Trump\u2019s economic advisers, Stephen Moore, said the announcement came as a surprise. To his knowledge, he said, the former president has not hammered out any of the details. \u201cThis is an idea that Trump came up with himself, just like not taxing tips,\u201d Moore said. \u201cIt\u2019s a way to help working-class folks. \u2026 If you\u2019re putting in more than 40 hours, you should be rewarded for it and not taxed for it.\u201d<\/p>\n
As for how much it would cost, Moore said, \u201cWe\u2019re going to start trying to determine that. \u2026 I don\u2019t think it would be hugely expensive, but I don\u2019t have a good estimate.\u201d<\/p>\n
Such a plan probably would require an act of Congress, and Moore said he believed Trump probably would favor a law in which overtime pay was exempt from income tax but still subject to payroll taxes, so that employees would still pay into Social Security and Medicare based on total wages including overtime pay.<\/p>\n
While Trump\u2019s Democratic rival, Vice President Kamala Harris, echoed his call to exempt tips from taxes, a spokesperson for her campaign blasted the no-tax-on-overtime proposal as Trump\u2019s \u201clatest snake oil sales pitch.\u201d<\/p>\n
\u201cHe is desperate and scrambling and saying whatever it takes to try to trick people into voting for him,\u201d Joseph Costello said in a statement. \u201cIf he takes power again, he will only look out for himself and his billionaire buddies and their big corporations.\u201d<\/p>\n
The Fair Labor Standards Act lays out detailed rules for workers who must receive overtime pay \u2014 many hourly workers are included, while many other workers like executives, teachers, babysitters and some elder-care workers are not. The law goes into great and sometimes unexpected detail \u2014 movie theater workers, for instance, are not required to be paid overtime.<\/p>\n
Once covered employees exceed 40 hours a week, the law requires their companies to pay them at least 1\u00bd times their normal pay for any further hours they work. Democrats and Republicans have gone back and forth on which workers should qualify for overtime, with Trump favoring overtime guarantees for 4 million fewer workers during his presidency than a plan favored by former president Barack Obama.<\/p>\n
Last year, Alabama became the first state to pass legislation exempting overtime wages from state income taxes. The bill was proposed by a Democrat and supported by Republicans, and the reprieve is currently in effect as an 18-month trial that ends next June. Similar measures have been introduced in several other statehouses.<\/p>\n
Economists raised concerns that Trump\u2019s proposal might distort how workers report their income. People who are currently salaried could press their employers to reclassify them as hourly workers, for instance. Employers could reduce their workers\u2019 base pay but greatly raise their overtime pay.<\/p>\n
\u201cYou can game the system here pretty easily,\u201d said Rajesh Nayak, a former assistant secretary for policy at the Labor Department. \u201cCEOs can get a base pay and get most of their pay in overtime, then suddenly they don\u2019t have to pay taxes on that.\u201d<\/p>\n
Others wondered why an hourly worker should pay less in taxes than a salaried worker with comparable annual pay.<\/p>\n
\u201cWorkers making the same income ought to be taxed the same way. It\u2019s true whether it\u2019s tips. It\u2019s true whether it\u2019s overtime. As policy, it fails the equity test. And I have no idea what it\u2019s going to cost, but the cost will not be trivial,\u201d said Howard Gleckman, a senior fellow at the Tax Policy Center. \u201cYou\u2019re going to want to maximize your overtime pay because it\u2019s tax-free and minimize your regular pay.\u201d<\/p>\n
While experts have not yet run the numbers on the concept of exempting all overtime from taxes, analysts have said that Trump\u2019s no-tax-on-tips idea could cost the government at least $10 billion a year. Exempting Social Security could cost more than 10 times as much and accelerate the depletion of the Social Security Trust Fund.<\/p>\n
Trump pitched the newest idea at his rally Thursday as a boon to deserving groups of workers.<\/p>\n
\u201cThe people who work overtime are among the hardest-working citizens in our country, and for too long, no one in Washington has been looking out for them,\u201d he said to cheers. \u201cThey\u2019re police officers, nurses, factory workers, construction workers, truck drivers and machine operators. It\u2019s time for the working man and woman to finally catch a break, and that\u2019s what we\u2019re doing, because this is a good one.\u201d<\/p>\n
He sought the crowd\u2019s approval. \u201cIf you are an overtime worker, when you\u2019re past 40 hours a week, think of that: Your overtime hours will be tax-free. Okay? Good? You\u2019re going to have it.\u201d<\/p>\n<\/p>\n
Former president Donald Trump pitched yet another idea meant to win over hourly workers that surprised his own advisers: Stop taxing overtime. \u201cWe will end all taxes on overtime. You know what that means?\u201d he said Thursday during a campaign stop in Arizona. \u201cThat gives people more of an incentive to work. It gives the […]<\/p>\n","protected":false},"author":0,"featured_media":9544,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-9543","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/9543","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=9543"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/9543\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/9544"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=9543"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=9543"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=9543"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}