A top U.S. ally reckons with an age of ‘turbulence'
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Forbes
2 minutes ago
- Forbes
The Budget's Tax Cuts On Tips And Overtime Are Popular But Few Benefit
A recent Wall Street Journal poll reported widespread support for three of President Trump's campaign ideas that Congress added to the budget bill it passed on July 3rd. While respondents generally opposed the overall law, new tax deductions for tip and overtime income and for older adults were quite popular. But respondents may have been unaware of one key fact: Few will gain from these tax changes. The Tax Policy Center estimates: All three tax breaks will be available from 2025 through 2028. Tips and overtime pay still will be subject to payroll taxes. TPC estimates about 30 percent of households would benefit from all of Trump's add-ons combined, including deductions for OT, tips, auto loans, and seniors. For all households, these provisions will cut taxes by an average of about $300 in 2026. On the campaign trail, President Trump framed his policies in simple and bold terms: No taxes on tips. No taxes on overtime. No taxes on Social Security. While headline writers still describe the changes in the same vivid terms (here and here), the reality is far different. And much less generous. There are two big reasons. First, most workers don't get tips or overtime pay. Second, low-income workers and retirees already pay no federal income tax simply because they make so little money. If you pay no income tax now, all these extra deductions do you no good, no matter how generous they sound. For example, more than 99 percent of households making less than about $35,000 (the lowest-income 20 percent) gain nothing from the deductions for tips and overtime. Nearly 99 percent of low-income older adults get no help from the senior deduction. More than that, Congress's final design of each of these tax cuts further shrinks the number of beneficiaries. The Tip Deduction The budget law allows workers to deduct no more than $25,000 in tips. Self-employed workers can deduct only up to their net income from the business where the tips were earned. The deduction starts phasing out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers). In addition, only those in occupations where workers 'customarily and regularly' received tips in the past will be eligible. How many tipped workers will benefit from the new deduction? About 60 percent among households that report tipped income from workers who are not dependents. Two-thirds live in households with incomes between $50,000 and $200,000. However, the share of households that benefit falls to about half once you the many dependents who report tipped income, such as students who work part-time. Keep in mind that TPC analyzed tax benefits only. Many low-income tipped workers may lose Medicaid benefits or Affordable Care Act premium subsidies due to other provisions of the budget law. The Center for American Progress estimates, for example, estimated that more than 500,000 tipped food service workers receive Medicaid. The Overtime Deduction The overtime law comes with its own limits. A worker can deduct no more than $12,500 in overtime pay ($25,000 if married). The deduction applies only to the portion that exceeds their regular pay. In other words, if a worker gets time-and-a-half pay, they can only deduction the extra 'half.' The work must meet the Fair Labor Standards Act definition of overtime. And like the tips provision, the OT deduction phases out for taxpayers starting at $150,000 ($300,000 for joint filers). Even with the phase-out, the biggest beneficiaries of the OT deduction are those making between about $217,000 and $460,000. Their taxes will be reduced by $500-$600, or about 0.2 percent of their after-tax income. The OT deduction will come with other still-unwritten guardrails to prevent employers and employees from gaming the system by designating regular pay as overtime. The Senior Deduction The tax break for seniors is entirely different from what Trump proposed when campaigning. Instead of exempting Social Security benefits from tax, it gives some older adults a special deduction against all income. Overall, TPC estimates fewer than half of older adults will benefit at all. And the average tax cut for all seniors will be about $450. Not nothing, but hardly life changing. Among seniors, the biggest beneficiaries will be those making between about $130,000 and $190,000 (the highest-income 80 percent to 90 percent). More than 95 percent will benefit from the higher deduction. By contrast, about 99 percent of those making $24,000 or less would get no benefit from the higher deduction. Estimates of who benefits from the tips and overtime deductions are uncertain, since it ultimately will depend on rules the Treasury Department and the IRS have yet to write. Still, TPC's analysis provides a good estimate of the number of people who will benefit from Trump's tax ideas. And there are a lot fewer than people seem to think.
Washington Post
2 minutes ago
- Washington Post
Labor statistics agency aims to calm furor after Trump fires commissioner
The Bureau of Labor Statistics signaled to staff members Monday morning that work would continue as usual at the statistical agency, where President Donald Trump fired the top official Friday over a bleak jobs report. 'Our mission is unchanged — to provide high quality data to the nation,' William Wiatrowski, the agency's acting commissioner, wrote in an email to all BLS employees obtained by The Washington Post. Wiatrowski was appointed as interim leader Friday.
CNN
2 minutes ago
- CNN
Analysis: Information is power, and Trump wants more control over it
Climate change reports, deleted. DEI initiatives, banned. Local TV and radio stations, defunded. Books, removed from military academies. Names of civil rights leaders, erased from ships. History lessons, purged from museums. The list goes on and on. President Trump and his government appointees keep asserting more control over ideas and information — which has the effect of taking power away from independent researchers, historians, and the real news outlets that he frequently calls 'fake.' Friday's abrupt firing of the labor statistics chief is one of the most dramatic examples yet. But this push for control has been evident all throughout his second term — and the individual headlines should be analyzed as part of a pattern, lest the memories start to fade. Remember the headlines about vaccine data being deleted from government websites last winter? Or the bogus math on DOGE's 'receipts' page? How about the 'Friday night purge' of impartial watchdogs investigating abuse within the government? 'Trump increasingly is playing the role of information gatekeeper,' Clay Calvert of the American Enterprise Institute wrote a prophetic blog post back in February. Calvert said Trump was 'dictating access on his terms' – promoting MAGA media outlets while punishing The Associated Press for not adopting Trump's 'Gulf of America' name. That AP dispute was about control over information. So, too, was the Trump White House's decision to purge a database of transcripts documenting his announcements and public appearances. The president has also objected to unflattering stories by lodging legal threats against news outlets. In one recent case, he followed through with a defamation lawsuit against the Wall Street Journal, which analysts said could have a chilling effect on reporting writ large. The White House has framed some of its most aggressive rewrites and removals as common-sense corrections. 'Restoring Truth and Sanity to American History' was the title of one such executive order in March. Another move to shut down a reliable source of information, the US-funded international broadcaster known as Voice of America, was framed by the administration as a way to curtail 'radical propaganda.' One of the alleged examples was a six-year-old news report 'about transgender migrants seeking asylum in the United States.' Every administration tries to shape reality to some degree. But 'Trump's statistical purges have been faster and more sweeping — picking off not just select factoids but entire troves of public information,' the Washington Post asserted in March. One glaring example involves the National Climate Assessment, a congressionally mandated report on climate change. The authors of the assessment were fired and previous versions 'have been hidden from view on government websites,' as CNN's Zachary B. Wolf wrote last week. Trump's dispute with the Bureau of Labor Statistics further raises the stakes — and the alarms about creeping authoritarianism. 'Suppressing statisticians is a time-honored tool for leaders trying to solidify their power and stifle dissent,' George Stephanopoulos said on ABC's 'This Week' on Sunday. 'It's happened throughout history, most recently in Venezuela and Turkey.' His guest, Lawrence Summers, the former treasury secretary, said that 'firing statisticians goes with threatening the heads of newspapers. It goes with launching assaults on universities. It goes with launching assaults on law firms.' 'This is really scary stuff,' Summers added. Yet some Trump aides and allies are publicly defending the firing. National Economic Council director Kevin Hassett said Monday morning on CNBC that the jobs data 'could be politically manipulated.' This battle for control isn't happening in a vacuum. There is evidence that media scrutiny and public pressure do make a difference. Back in March, the Associated Press revealed that an anti-DEI crusade at the Pentagon led to images of war heroes, women, minorities and even the famed Enola Gay warplane being flagged for removal. The embarrassing episode forced Defense Secretary Pete Hegseth's aides into a defensive crouch. Similarly, just last week, the Washington Post reported on the Smithsonian removing Trump's name from an impeachment exhibit at the National Museum of American History. The whiff of scandal was so overwhelming that the museum issued a statement on Saturday denying any White House pressure and pledging to update the exhibit in the coming weeks.
