Trump has previously stated he would look into legislation to abolish the taxes on gratuities to help service workers. Trump is running against Democratic Vice President Kamala Harris in what appears to be a close contest, according to surveys. Harris has promised something similar.
On September 12, Republican candidate for US president Donald Trump declared that, should he win the election on November 5th, he would eliminate all overtime pay taxes as part of a larger tax cut package.
“We will eliminate all overtime taxes as part of our additional tax cuts,” Trump declared during a rally in Tucson, Arizona. “Your overtime hours will be tax-free.”
Trump has previously stated he would look into legislation to abolish the taxes on gratuities to help service workers. Trump is running against Democratic Vice President Kamala Harris in what appears to be a close contest, according to surveys. Harris has promised something similar.
In reaction to Trump’s plan on Thursday, a spokesman for the Harris campaign stated, “He is desperate and scrambling and saying whatever it takes to try to trick people into voting for him.”
This month, during a campaign rally attended by union workers, Harris charged that during his presidency from 2017 until 2021, Trump has been “blocking” overtime for millions of workers.
2019 saw the Trump administration implement a rule that extended overtime pay eligibility to an extra 1.3 million US workers. This replaced a more generous proposal put out by Trump’s Democratic predecessor, President Barack Obama.
The wage threshold for being excused from overtime compensation was raised by the Trump administration from the previous $23,660 to $35,568 per year. Workers’ rights organizations objected to the change, claiming that it protected significantly fewer workers than the Obama-era program.
The Labor Department suggested increasing the upper limit to $47,000 during Obama’s presidency, which would have increased the number of workers eligible for overtime by about 5 million. Later on, that rule was overturned in court.
Blue-collar workers, including those employed in fast food restaurants, hospitals, retail assistants, and other low-paying occupations, gain the most from overtime compensation at these wage levels.
“The 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,” Trump remarked on Thursday.
In accordance with Labor Department regulations, qualified employees who work more than 40 hours in a single workweek must get at least time-and-a-half compensation.
According to data from the Bureau of Labor Statistics, as of last month, non-supervisory factory workers in the United States worked an average of 3.7 hours of overtime per week.
The nonpartisan Congressional Budget Office estimates that Trump’s plan to permanently prolong the tax cuts he passed as president would increase the U.S. deficit by $3.5 trillion through 2033, so not taxing overtime would result in less money for the government. During the first eleven months of this fiscal year, the U.S. budget deficit is $1.9 trillion.
The amount of money collected by the government from taxes on overtime compensation is unknown.
The federal government would be taking a new approach with Trump’s proposal. This year, Alabama became the first state to temporarily exempt overtime pay for hourly workers from state taxes. The temporary move was supported by lawmakers in part because it helped firms fill positions during a tight labor market. There is an 18-month limit on the exemption.
