The Grassroots Corner October 28th, 2024

TRUMP: NO TAX ON OVERTIME

           Donald Trump’s campaign is full of surprises. First, he called for no tax on tips, which Kamala Harris quickly copied. Then, he called for no tax on Social Security benefits. We commented on these proposals in previous Grassroots Corners. Recently, Donald Trump added to his no-tax list: no tax on overtime. The Washington Post, in an article by Julie Weil from September 13, 2024, quoted Trump, “‘We will end all taxes on overtime. You know what that means?’ he said Thursday [September 12, 2024] during a campaign stop in Arizona. ‘That gives people more of an incentive to work. It gives the companies, it’s a lot easier to get the people. … It would be unbelievable. You’ll get a whole new workforce by doing no taxes on overtime.’”

            As with Trump’s previous proposals, the chorus from the critics was loud and immediate. Weil continues, “‘If you did not put any guardrails on this, it would be a huge revenue loser,’ 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’s wages as overtime as possible.’ ‘As long as you’re not violating the federal minimum wage or the state minimum wage, it’s off to the races.’”

            Duke is probably right.

            Weil cites our Advisory Board member, Steve Moore, for a more benign view. Weil quotes Moore as saying, “… the announcement came as a surprise. To his knowledge, [Moore] said, the former president has not hammered out any of the details. ‘This is an idea that Trump came up with himself, just like not taxing tips,’ Moore said. ‘It’s a way to help working-class folks. … If you’re putting in more than 40 hours, you should be rewarded for it and not taxed for it.’ As for how much it would cost, Moore said, ‘We’re going to start trying to determine that. … I don’t think it would be hugely expensive, but I don’t have a good estimate.’”

           Quite predictably, Trump’s Democratic rival, Kamala Harris blasted the proposal. She quoted Harris, “Trump’s ‘latest snake oil sales pitch.’ ‘He is desperate and scrambling and saying whatever it takes to try to trick people into voting for him,’ Joseph Costello [a spokesperson for the Harris-Walz Campaign] said in a statement. ‘If he takes power again, he will only look out for himself and his billionaire buddies and their big corporations.’”

           Garrett Watson and Erica York, writing for The Tax Foundation on September 13, 2024[1], commented, “We estimate a lower-bound reduction in revenue for exempting all overtime pay from the individual income tax of $680.4 billion over 10 years on a conventional basis. This latest proposal would increase Trump’s already promised $6.1 trillion in tax cuts to $6.8 trillion and raise the total deficit increase of his entire tax and tariff plan to $2.0 trillion over 10 years. Further exempting all overtime pay from employee-side payroll taxes (6.2 percent for Social Security and 1.45 percent for Medicare) combined with the income tax exemption would reduce tax revenues by $1.1 trillion over 10 years.”

           So, where do you think Trump is going with these proposals: first, to eliminate tax on tips; second, to eliminate tax on Social Security; third, to replace the income tax with tariffs, and now, to eliminate tax on overtime? They probably do not make much sense by themselves. But together, these proposals can only tease one idea: the FAIRtax. People may not be ready for the FAIRtax yet, but when they see the overall effect of the income tax through Trump’s ideas, they may embrace our plan.

           I would love to hear from you about better selling the FAIRtax.
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🇺🇸   Call For Pictures & WriteUps - We need more of you to send in pictures and news. If you have something to share, please send your material to me, Jim.Bennett@FAIRtax.org, (908) 578-4975, or fax (908) 598-2888. When others see your activity, they are inspired, and the process snowballs. When the process snowballs, Congress Members, Senators, and even the President start to listen.