Latest news with #BigBeautifulBillAct
Yahoo
a day ago
- Business
- Yahoo
Trump's plan on overtime taxes, explained
During the 2024 campaign, Donald Trump promised "no tax on overtime" — an exemption for federal income taxes on extra pay for working overtime. So how's that coming along? There is a provision in the "big, beautiful bill" passed by the House in May. The Senate is now considering the legislation. The details remain to be seen, but for now the tax break is much smaller than you might assume and more short-lived, as it would expire when Trump leaves office. Here are answers to some common questions about the "no tax on overtime" proposal: Trump first proposed to end overtime taxes at a campaign rally in Tucson, Arizona, on Sept. 12, about two months before Election Day. It was part of a broader set of proposals thrown out with little detail in the final weeks of the campaign. 'That gives people more of an incentive to work. It gives the companies a lot. It's a lot easier to get the people,' he said. 'You know, I went to some economists, great ones, and I said, 'What do you think?' They said, 'It would be unbelievable. You'll get a whole new workforce by doing that,'' he added. As with all of his campaign proposals, details were scant. The nonpartisan Tax Foundation pegged the cost at somewhere between $227 billion and $1.5 trillion, depending on how it would be implemented. It's now clear that the proposal is on the smaller side, including only a deduction for federal income tax and not any other taxes. The Congressional Budget Office said the current overtime proposal would reduce revenue by only $124 billion. Still, the budget provision lacks a lot of details, which means the provision will likely 'require hundreds of pages of IRS guidance' and send taxpayers 'through a maze of new rules and compliance costs,' according to the Tax Foundation. The Big Beautiful Bill Act, which passed the House, includes an exemption on overtime taxes. But as with the proposed $1,000 baby bonus and exemption for taxes on tips in the bill, the overtime tax break would be temporary, expiring just as Trump leaves office in 2028. That helps Republicans in Congress keep the cost of the bill down while setting up the next president to have to decide whether to spend political capital extending the exemptions or take a hit in the polls by letting them lapse. Under the House bill, only workers making less than $160,000 per year would qualify for the exemption. It would also apply only to the amount workers are paid for overtime over their regular salaries, which employers would be required to include in a new box on your annual W-2 form. There is no cap on how much overtime a worker could claim in a year. The Senate has not voted on its version of the spending bill, which will have to be reconciled with the House version for a final vote before heading to the president's desk. For now, the Senate version of the bill does not include an exemption from overtime taxes. There are several standalone Senate bills to create the exemption, however, and senators could still choose to add it to their bill. Lawmakers plan to vote on the final version of the bill by the end of summer. The White House Council of Economic Advisers — who work for Trump — estimated that the average overtime worker would get a tax break of $1,400 to $1,750 per year until it expired in 2028. But an analysis from the Institute on Taxation and Economic Policy pegged the average tax savings at a much lower $330 per year. What's more, it found that it would benefit higher-income workers more, with the bottom 60% snagging an average of $80 and the top 20% pocketing an average of $940. You would need a Social Security number to claim the deduction, so it would not cover people here on work visas. This was more likely campaign hyperbole, like the "big, strong men" with tears in their eyes whom Trump often describes. In fact, economists have mixed thoughts about the exemption because of the loss of revenue, which would increase the national debt, and the potential for unexpected side effects in the labor market. Under the Fair Labor Standards Act, nonexempt employees working overtime must be paid at 1.5 times their regular rate of pay for all hours they worked past 40 in a workweek. Since that pay would now be tax-free, it's even more lucrative. This could mean more workers volunteer for overtime hours, leading employers to hire fewer new workers. Or employers could decide they're spending too much on overtime and switch to more part-time staffing. Or it might have no effect on either workers or employers, since it's only a temporary tax break. At the macro level, the tax break might boost the economy a little by putting more cash in workers' pockets, but the loss in revenue might increase the national debt, which is starting to hurt the economy. No one knows, and the effects might be so small that they can't be measured, so we may never know. The bottom line is that this was not an idea that economists dreamed up. It was a campaign pitch to some groups of Trump supporters — the Fraternal Order of Police, for one, endorsed the idea — who tend to work a lot of overtime. This article was originally published on
Yahoo
3 days ago
- Business
- Yahoo
Elon Musk is getting a few things off his chest
As billionaire Elon Musk more or less retreats from Washington, his latest media tour is well underway. In a clip released Tuesday night from an interview with 'CBS Sunday Morning,' he criticized House Republicans' recently passed megabill to fund President Donald Trump's agenda. 'I was disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing,' Musk said from SpaceX's Texas launch site. He added: 'I think a bill can be big or it can be beautiful, but I don't know if it can be both. My personal opinion.' Musk likewise vented to The Washington Post about how unfairly he was treated in his few months in Washington: 'The federal bureaucracy situation is much worse than I realized,' he said. 'I thought there were problems, but it sure is an uphill battle trying to improve things in D.C., to say the least.' He said repercussions over DOGE cuts had been severe. 'DOGE is just becoming the whipping boy for everything,' he said. 'So, like, something bad would happen anywhere, and we would get blamed for it even if we had nothing to do with it.' Musk does have plenty of reason to be salty about his time in government. The GOP megabill — actually called the Big Beautiful Bill Act — has its share of large spending cuts, mostly to offset tax cuts for the wealthy. But it almost entirely ignores DOGE's efforts. Politico reported Wednesday that the White House is only just now preparing to send a roughly $9 billion rescission request to the Hill. That's only a fraction of the cuts DOGE has made — which in turn are only a fraction of the promised $2 trillion in savings Musk would usher in — and is itself a tacit admission that he couldn't legally make these cuts unilaterally. Meanwhile, many of DOGE's biggest changes find themselves tied up or even reversed for now in court. A federal judge ruled Tuesday that a massive lawsuit claiming Musk and DOGE's efforts are likely unconstitutional could proceed. And politically, Democrats have used Musk as the poster child for Trump's unlawfulness, buoyed by the Tesla CEO's clumsy efforts to use his fortune to sway elections. There's also the matter of how the GOP's bill might affect Tesla. Though SpaceX's government contracts continue to grow, the electric vehicle company is still Musk's bread and butter. The House-passed legislation rolls back many of the Biden-era clean energy programs, including the $7,500 tax credit for purchasing electric vehicles. Musk said he was in favor of nixing the credit last year, explaining it would help Tesla over its competitors — but that was before the plunge in sales that has accompanied his increased political footprint. While Musk told the Post that he wasn't entirely done with DOGE, he's committed to refocusing his efforts on his companies over government work. When it comes to SpaceX, his big goal for Tuesday's launch was one 'where hopefully things don't explode. The last few times it exploded. This is a very real concern. Big rockets, don't explode: Goal. I mean, there's so much energy in the rocket, it desperately wants to explode at any given point in time.' For the record: It did not explode — but it did spin wildly out of control and fail to land in one piece. Metaphors are funny like that. This article was originally published on
Yahoo
3 days ago
- Business
- Yahoo
Opinion - Trump's bill will feed the rich and starve the poor
These are the times that try people's souls and tax their faith in human nature. The House of Representatives just passed President Trump's big bad bill that awards huge tax breaks for rich people and big corporations and rips a gaping hole in the social safety net that protects the poor in bad economic times. The draconian proposal undermines the already shaky health, wealth and wellbeing of millions of struggling American families. The MAGA endgame is to fatten up a few big bankers and billionaires, starve the growing ranks of the working poor and hope the shrinking middle class doesn't care. Be careful what you wish for. The Republicans may get what they wants, but they risk losing control of the House after the chaos created by this massive transfer of wealth from the poor to wealthy Americans. An April survey from health policy research group KFF indicates the overwhelming majority of people oppose the Medicaid cuts in Trump's bill, which is incredibly titled — not making this up — the 'Big Beautiful Bill Act.' Just about every Democrat and four out of five independents oppose the proposal. Even most Republicans feel the cuts are a bad idea. The nonpartisan Congressional Budget Office analysis indicates the House bill over the next decade would add $3.8 trillion to the federal budget deficit, increase the assets of the top 10 percent earners by 2 percent and reduce the resources of the bottom 10 percent by 4 percent. The proposal would deprive millions of Americans of medical care and many of food. The action will inevitably lead to the tragic deaths of many people and malnutrition for many kids. The cuts will disproportionately hurt residents of blue states which expanded health care opportunities under ObamaCare. Who will take care of the ill and feed the hungry? Republicans just don't care as long as the rich get even richer. The GOP response is that tax cuts for the rich will trickle down to working families and the poor. If you believe that, I have a bridge in Brooklyn that I would like to sell you. These devastating cuts will create the perfect storm of suffering and despair. There will be more poor people because of Trump's reckless economic policies and less aid to take care of them as they fall through the cracks. This will not end well for millions of struggling families, many of whom are Trump supporters. Congress is in recess for the next two weeks, but the war of words continues. Then it's the Senate's turn to handle the hot potato. House Speaker Mike Johnson (R-La.) has warned Senate Republicans not to alter the big bad bill but big changes are likely even if the president wants the House bill. Consideration in the Senate will put vulnerable Republicans like Sens. Susan Collins (R-Maine) and Tom Tillis (R-N.C.) under the gun. Sen. Rand Paul (R-Ky.) has already announced his opposition, and both Sens. Lisa Murkowski (R-Alaska) and Mitch McConnell (R-Ky.) take delight in tormenting Trump. Budget hawk Sen. Ron Johnson (R-Wisc.) openly worries about the increase in the budget deficit, and Sen. Josh Hawley (R-Mo.) is wary of the cuts to Medicaid. They will get little or no help for their dastardly deed from Senate Democrats. The response to presidential pressure, the threat of a government shutdown and the Moody's downgrade of the U.S. credit rating mean a budget bill will probably pass the Senate. But only God knows what it will look like. The Senate could still come back with a bill that has fewer tax cuts and tax breaks (like the increased write-off for state and local taxes) and restores some of the budget cuts. That will create chaos when the Senate version goes back to the House. The battle over Medicaid is really a battle over the future of health care. We have a broken, expensive system that needs fundamental reform. Trump's proposal will only make the problem worse. Democrats have a responsibility to make it better. The Republicans' cuts mean people will die for want of health care or develop long-term illnesses that will crush the system in the future. There will be an increased demand for free care that will decapitate already overwhelmed hospitals. After Trump destroys it, it will be up to Democrats to rebuild the health care infrastructure when the party returns to power. The late great Democratic House Speaker Sam Rayburn once said, 'Any jackass can kick down a barn, but it takes a carpenter to build one.' The Republicans' assault is an abrupt reversal of the trend created by Democratic presidents to improve health care for ailing Americans. President Lyndon Johnson gave us Medicare and Medicaid and Barack Obama improved on LBJ's good works. Now it's up to the next Democratic chief executive to take the next big step. Fasten your seatbelts, we're in for a long bumpy ride through the labyrinthine legislative process as it grinds its way up and down Pennsylvania Avenue. Brad Bannon is a national Democratic strategist and CEO of Bannon Communications Research which polls for Democrats, labor unions and progressive issue groups. He hosts the popular progressive podcast on power, politics and policy, Deadline D.C. with Brad Bannon. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
3 days ago
- Business
- The Hill
Trump's bill will feed the rich and starve the poor
These are the times that try people's souls and tax their faith in human nature. The House of Representatives just passed President Trump's big bad bill that awards huge tax breaks for rich people and big corporations and rips a gaping hole in the social safety net that protects the poor in bad economic times. The draconian proposal undermines the already shaky health, wealth and wellbeing of millions of struggling American families. The MAGA endgame is to fatten up a few big bankers and billionaires, starve the growing ranks of the working poor and hope the shrinking middle class doesn't care. Be careful what you wish for. The Republicans may get what they wants, but they risk losing control of the House after the chaos created by this massive transfer of wealth from the poor to wealthy Americans. An April survey from health policy research group KFF indicates the overwhelming majority of people oppose the Medicaid cuts in Trump's bill, which is incredibly titled — not making this up — the 'Big Beautiful Bill Act.' Just about every Democrat and four out of five independents oppose the proposal. Even most Republicans feel the cuts are a bad idea. The nonpartisan Congressional Budget Office analysis indicates the House bill over the next decade would add $3.8 trillion to the federal budget deficit, increase the assets of the top 10 percent earners by 2 percent and reduce the resources of the bottom 10 percent by 4 percent. The proposal would deprive millions of Americans of medical care and many of food. The action will inevitably lead to the tragic deaths of many people and malnutrition for many kids. The cuts will disproportionately hurt residents of blue states which expanded health care opportunities under ObamaCare. Who will take care of the ill and feed the hungry? Republicans just don't care as long as the rich get even richer. The GOP response is that tax cuts for the rich will trickle down to working families and the poor. If you believe that, I have a bridge in Brooklyn that I would like to sell you. These devastating cuts will create the perfect storm of suffering and despair. There will be more poor people because of Trump's reckless economic policies and less aid to take care of them as they fall through the cracks. This will not end well for millions of struggling families, many of whom are Trump supporters. Congress is in recess for the next two weeks, but the war of words continues. Then it's the Senate's turn to handle the hot potato. House Speaker Mike Johnson (R-La.) has warned Senate Republicans not to alter the big bad bill but big changes are likely even if the president wants the House bill. Consideration in the Senate will put vulnerable Republicans like Sens. Susan Collins (R-Maine) and Tom Tillis (R-N.C.) under the gun. Sen. Rand Paul (R-Ky.) has already announced his opposition, and both Sens. Lisa Murkowski (R-Alaska) and Mitch McConnell (R-Ky.) take delight in tormenting Trump. Budget hawk Sen. Ron Johnson (R-Wisc.) openly worries about the increase in the budget deficit, and Sen. Josh Hawley (R-Mo.) is wary of the cuts to Medicaid. They will get little or no help for their dastardly deed from Senate Democrats. The response to presidential pressure, the threat of a government shutdown and the Moody's downgrade of the U.S. credit rating mean a budget bill will probably pass the Senate. But only God knows what it will look like. The Senate could still come back with a bill that has fewer tax cuts and tax breaks (like the increased write-off for state and local taxes) and restores some of the budget cuts. That will create chaos when the Senate version goes back to the House. The battle over Medicaid is really a battle over the future of health care. We have a broken, expensive system that needs fundamental reform. Trump's proposal will only make the problem worse. Democrats have a responsibility to make it better. The Republicans' cuts mean people will die for want of health care or develop long-term illnesses that will crush the system in the future. There will be an increased demand for free care that will decapitate already overwhelmed hospitals. After Trump destroys it, it will be up to Democrats to rebuild the health care infrastructure when the party returns to power. The late great Democratic House Speaker Sam Rayburn once said, 'Any jackass can kick down a barn, but it takes a carpenter to build one.' The Republicans' assault is an abrupt reversal of the trend created by Democratic presidents to improve health care for ailing Americans. President Lyndon Johnson gave us Medicare and Medicaid and Barack Obama improved on LBJ's good works. Now it's up to the next Democratic chief executive to take the next big step. Fasten your seatbelts, we're in for a long bumpy ride through the labyrinthine legislative process as it grinds its way up and down Pennsylvania Avenue. Brad Bannon is a national Democratic strategist and CEO of Bannon Communications Research which polls for Democrats, labor unions and progressive issue groups. He hosts the popular progressive podcast on power, politics and policy, Deadline D.C. with Brad Bannon.
Yahoo
3 days ago
- Business
- Yahoo
Opinion - The bond market is missing the real ‘big, beautiful' story
After touching 4 percent on Apr. 2, the yield on the 10-year Treasury has climbed more than 50 basis points. Pundits and portfolio managers alike insist the bond market vigilantes are delivering a decisive and unmistakable rebuke of President Trump's One Big Beautiful Bill Act and its tax cuts — just passed in the House and now pending in the Senate. On the surface, they appear to have a case. The Congressional Budget Office projects that the Big Beautiful Bill Act will add almost $4 trillion to the national debt over the next ten years. To the CBO, tax cuts mean less revenue. Less revenue in the absence of equal spending cuts means more borrowing. More borrowing means higher bond yields, a bigger interest payment burden on future generations, and a fiscal drag on GDP growth. Go a bit deeper, however, and it is clear that financial markets do not have complete information about either the historical inaccuracy of CBO forecasts or the substantial positive revenue impact of the new Trump tariffs. For years, a feckless CBO, saddled by archaic Keynesian and static assumptions, has routinely underestimated the dynamic revenue effects of pro-growth tax policies, deregulatory momentum, lower energy prices, and trade deficit-reducing fair-trade policies. Exhibit A is the Trump 2017 Tax Cuts and Jobs Act. When Congress enacted this historic legislation, the CBO projected only modest improvements in GDP growth, estimating a return to trend growth around 1.8 percent to 2.0 percent. Yet actual growth in 2018 jumped to 2.9 percent, exceeding CBO forecasts by nearly a full percentage point. What the CBO forecast missed was a surge in business investment, the repatriation of overseas earnings, and a sharp increase in consumer and small business confidence that followed both the tax cuts and sweeping regulatory reforms. This miscalculation led to persistent underestimates of tax revenue, employment gains, and productivity improvements during the early Trump years. This demonstrates a systemic blind spot in CBO modeling whenever policies deviate from the Keynesian static status quo norm. The CBO's latest score of Trump's One Big Beautiful Bill Act is even worse. It pessimistically assumes a long-term, low-ball GDP growth rate of a mere 1.7 percent. This falls well short of what America's economy is capable of under Trump policies that promote a lower tax and regulatory burden, strategic energy dominance, and trade deficit-reducing trade policies. The result of the CBO's low-ball GDP growth forecast is a projected increase in the federal debt over the next ten years of a whopping $3.8 trillion. If, however, we more realistically add a half or full point more to the projected growth rate, these more dynamic growth rates of 2.2 percent to 2.7 percent add between $1.2 trillion and $2.5 trillion in new tax revenues. In this scenario, the CBO's projected revenue shortfall drops from $3.8 trillion to $2.6 trillion under the 2.2 percent growth rate assumption and $1.3 trillion under the 2.7 percent growth rate assumption. That's still real money of course, but here's the buried lead. In making its projections, the CBO has refused to account for — or 'score' as they say in CBO lingo — any of the new revenues from the Trump reciprocal tariffs. Remember here a key goal of Trump's fair-trade policies is to shift the U.S. tax base from one primarily reliant on income taxes to one that, with the vision of the new External Revenue Service, is also supported by tariff revenues. Consider, then, the impacts on the CBO's projected revenue shortfall of just the modest 10 percent global baseline tariff Trump recently put into effect. Such a tariff, depending on consumer responses (as measured by demand elasticities) and enforcement efficacy (i.e., how much cheating occurs), should generate between $2.3 trillion and $3.3 trillion in additional revenue over the ten-year forecast period. When this revenue is layered onto the enhanced dynamic growth scenario, the projected budget impact from the One Big Beautiful Bill Act ranges from a modest $300 billion increase in the debt under the 2.2 percent growth assumption to as much as a $2 trillion surplus under the 2.7 percent growth assumption. As this forecast recognizes, as tariffs take hold and U.S. companies shift away from foreign suppliers, the volume of dutiable imports will decline — and with it tariff revenues. But this is not a flaw in the strategy or forecast; it is its greatest strength. Every dollar that no longer flows overseas will instead fuel domestic production, payrolls, and investment. That shift expands the tax base far beyond the narrow confines of tariff collections. As American factories hum, workers earn paychecks and spend them, generating higher income, payroll, and sales tax revenues. Domestic firms post profits and pay corporate taxes, while reinvesting in equipment, technology, and job creation. In this way, the new Trump tariffs catalyze a multiplier effect that produces not only self-financing fiscal policy, but also a broader industrial renaissance. It is a virtuous cycle that the Congressional Budget Office simply refuses to score — but one that any business owner, worker, or supply chain strategist can see plain as day. Which brings us back to the bond market. The current rise in yields reflects fear — not facts. Bond traders are pricing in a future where the government borrows trillions more with no offsetting revenues. They believe the tax cuts are not paid for. To the contrary, Trumpnomics and the Trump tariffs will put America on a sounder fiscal footing than any policy proposal in decades. That's the complete information our financial markets should be working from – and bond investors should yield to that wisdom. Peter Navarro is the White House Senior Counselor for Trade and Manufacturing. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
