(Bloomberg) — Republican Donald Trump pledged to eliminate taxes on overtime pay at a rally days after a shaky debate performance, as the presidential nominee looked to turn the page with a new populist tax cut proposal.
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“We will end all taxes on overtime,” Trump said Thursday at a rally in Tucson, Arizona. “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.”
The overtime plan would increase the value of hourly workers’ time-and-a-half earnings after 40 hours a week. That has the potential to motivate the blue-collar workers critical to his base of support to show up to vote for him on Election Day.
The proposal comes two days after Trump’s unsteady debate performance that both pundits and surveys say his opponent Kamala Harris won. Many of Trump’s allies said the debate was a missed opportunity to focus on the economy, an issue where polls show voters trust the former president over Harris.
Over the last three months, Trump has rolled out a steady drumbeat of politically beneficial tax cut plans aimed at key election constituencies. He’s proposed ending all taxes on tipped income — a plan designed to appeal to the restaurant, hotel and casino workers in swing-state Nevada. He wants to eliminate all taxes on Social Security benefits, which would help older voters.
Trump’s tax cuts on tips and old-age benefits have broad bipartisan appeal, according to a Bloomberg News/Morning Consult poll last month. But they also come with a huge price tag: A Bloomberg review of all Trump’s tax proposals — including a proposed reduction of the corporate tax rate and the extension of his 2017 tax cuts — estimates that they would add more than $10.5 trillion to the national debt over 10 years.
Trump said his no-tax-on-overtime idea would help companies lure more workers and keep them on the job site for longer.
“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 the no taxes on overtime,” Trump said Thursday.
Trump’s plan to eliminate taxes on tips — an idea Harris has also embraced — has been criticized by economists because it could allow workers and employers to dodge taxes by characterizing wages as tips.
Mortgage Rates
Trump also vowed to cut mortgage rates to 2%, something he wouldn’t be able to control if he were to win a second term.
The president doesn’t set mortgage rates, and only has limited influence over the Federal Reserve, which sets the borrowing cost levels home loans are based on. The Fed is slated to meet next week and is expected to make a modest reduction to interest rates.
Mortgage rates in the US have dropped to the lowest level since February 2023. The average for a 30-year, fixed loan was 6.2%, down from 6.35% a week earlier, Freddie Mac said in a statement Thursday.
–With assistance from Hadriana Lowenkron and Stephanie Lai.
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