TLDR:
- Trump proposes eliminating taxes on overtime pay
- Plan aims to appeal to blue-collar workers and increase workforce participation
- Proposal follows other tax cut pledges for tips and Social Security benefits
- Critics argue these tax cuts could significantly increase the national debt
- Trump also promised to lower mortgage rates, despite limited presidential control
Donald Trump, the Republican presidential nominee, has announced a new proposal to eliminate taxes on overtime pay as part of his campaign platform.
The announcement came during a rally in Tucson, Arizona, where Trump pitched the idea as a way to support hardworking Americans and potentially increase workforce participation.
BREAKING NOW: Trump announces monumental new plan to eliminate ALL TAXES ON OVERTIME pay.
"The people who work overtime are among the hardest working citizens in our country — When you pass 40 hours a week, your overtime hours will be tax free."pic.twitter.com/jZhWEQX4og
— Chuck Callesto (@ChuckCallesto) September 12, 2024
The overtime tax cut plan is the latest in a series of tax reduction proposals Trump has put forward in recent months. Previously, he pledged to end taxes on tipped income and Social Security benefits, moves that have garnered bipartisan appeal according to polls.
However, these proposals come with a significant price tag, with estimates suggesting they could add over $10.5 trillion to the national debt over a decade.
Trump framed the overtime tax cut as a benefit for blue-collar workers, stating,
“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.”
He argued that the plan would incentivize work and help companies attract more employees.
The former president claimed he consulted with economists who said the idea would be “unbelievable” and could lead to “a whole new workforce.”
However, specific details on how the plan would be implemented or its potential economic impact were not provided during the announcement.
Critics, including the Harris campaign, have dismissed Trump’s proposal as a desperate attempt to win votes. Joseph Costello, a spokesperson for Vice President Kamala Harris’s campaign, stated that Trump is “saying whatever it takes to try to trick people into voting for him.”
Trump’s Tax Proposals
The overtime tax cut proposal follows a pattern of Trump targeting specific voter demographics with tailored tax plans.
His proposal to eliminate taxes on tipped income was seen as an appeal to restaurant, hotel, and casino workers in swing states like Nevada. Similarly, the plan to end taxes on Social Security benefits is viewed as a move to court older voters.
While these tax cut proposals have broad appeal, economists and policy analysts have raised concerns about their potential impact on the federal budget.
The Committee for a Responsible Federal Budget estimated that eliminating taxes on tip income alone could add between $100 billion and $200 billion to the nation’s deficits over a 10-year period.
During the same rally, Trump also promised to lower mortgage rates to 2%, a claim that has been met with skepticism given the limited control a president has over such rates. Mortgage rates are primarily influenced by the Federal Reserve’s monetary policy and broader economic conditions.
As of September 2024, the average 30-year fixed mortgage rate in the US stands at 6.2%, the lowest level since February 2023. While this represents a decrease from previous weeks, it remains significantly higher than the 2% rate promised by Trump.
The overtime tax cut proposal comes at a time when Trump is looking to regain momentum in his campaign following what many observers considered a shaky debate performance against Vice President Harris.
Polls have shown that voters tend to trust Trump more on economic issues, and this latest proposal appears to be an attempt to refocus the campaign on his economic platform.
Such tax cuts would require congressional approval, and their feasibility would depend on the composition of Congress following the election.
