Donald Trump, Republican US presidential candidate, declared on Thursday that, should he win the election on November 5, he would eliminate all taxes on overtime compensation as part of a larger tax reform proposal.
Trump has previously stated he would look into legislation to abolish the taxes on tips to help service workers. He is running against Democratic Vice President Kamala Harris, who has given a similar promise.
Responding to Trump's proposal, a Harris campaign spokesman called him "desperate," "scrambling," and willing to say anything in order to trick people into voting for him.
This month, during a campaign rally attended by union workers, Harris charged that Trump had been "blocking" millions of workers' overtime during his presidency from 2017 to 2021.
2019 saw the administration of Donald Trump implement a rule that increased overtime pay eligibility to 1.3 million more American workers. This replaced a more generous proposal put out by Trump's Democratic predecessor, President Barack Obama.
The wage threshold for being exempt from overtime compensation was raised by the Trump administration from the previous $23,660 to $35,568 annually. Labor organizations criticized the change, claiming that it covered significantly fewer workers than the Obama-era scheme.
The Labor Department suggested increasing the threshold to over $47,000 during the Obama administration, which would have increased the number of workers eligible for overtime by about 5 million. Later, a judge overturned the rule.
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.
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 statistics collected by the Bureau of Labor Statistics, US factory workers in non-supervisory occupations worked an average of 3.7 hours of overtime each week as of last month.
Not imposing taxes on overtime would mean lower revenue for the government at a time when the nonpartisan Congressional Budget Office estimates that Trump's proposal to indefinitely extend the tax cuts he enacted as president would increase the national debt by $3.5 trillion by 2033. After 11 months of this fiscal year, the US budget deficit is at $1.9 trillion.
How much money the government gets from taxes on overtime pay is unknown.
For the federal government, Trump's plan would be a first. In an effort to assist employers in filling positions amid a tight labor market, Alabama became the first state this year to temporarily exempt overtime pay for hourly laborers from state taxes. This move received approval from lawmakers. It is only valid for eighteen months.