Donald J. Trump.
Republican presidential candidate Donald Trump announced today plans to end taxes on overtime pay if elected president. The Hill. Hourly employees would only have to pay taxes on 40 hours of work and anything after that would be payroll tax free. Congress would have to approve the measure but a bill was introduced in Congress earlier this year. Trump has also campaigned on ending taxes on tips, a proposal that Democratic candidate Kamala Harris stole, while he has also proposed ending taxes on social security payments as well.
My Comment:
As an hourly worker this would be huge for me. In 2023 I had about 300 hours of overtime and if I could have gotten all that money tax free it would have been great. It would have also kept me in a lower tax bracket, though, to be fair, very little of my income was taxed at the next level. Getting more money on my paycheck each week (and yes, I usually have a few hours of OT on each biweekly paystub) would be amazing.
This should be popular among both workers and businesses. Workers are obviously going to like getting paid a lot more for having to work more than 40 hours a week. But this is a big win for businesses as well. After all, I can't tell you how many times I have heard people saying it's not really worth it to work OT because the "government takes it all" anyways. That's not strictly accurate, but getting rid of the taxes would incentivize taking overtime shifts, which makes things easier for managers.
Will the proposal pass? It's possible. I think Republicans can get on board with this proposal and the GOP should have enough votes in the house and senate to pass the bill. There might be a few hurdles with deficit hawks who will be upset about the loss of tax revenue but I also think that more than a few Democrats would be willing to vote for this as well.
And I don't think the lost income will be that extreme, largely because these tax decreases will be coupled with tariffs on foreign goods. Those tariffs should be able to raise enough funds to more than cover this proposal and the no taxes on tips one. Though I don't know if it would counter the no taxes on social security (which is not a proposal I expect congress to pass). And since Trump's tariffs were deflationary in nature it might help with that issue as well.
The other problem is that Kamala Harris is likely to steal this idea and pass it off as her own, like she did with no taxes on tips. I don't think Harris has any inclination to actually pass either tax break but she will probably desperately want to get rid of a winning issue for Trump. And since that seemed to have worked on the tip tax, which wasn't mentioned in the debate once as far as I remember, it could happen again.
Regardless, I think this is another example of the new Republican party being more "progressive" and pro-worker than the Democrats. The Democrats make a lot of noise about being pro-worker but then they import competition from other countries and cause inflation. This would at least help me as a worker more than anything the Democrats have come up with this election cycle. I'm all in on Trump anyways, but if I wasn't I would probably vote for him now just out of naked self interest.
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