{"id":10951,"date":"2025-02-28T20:16:21","date_gmt":"2025-02-28T20:16:21","guid":{"rendered":"https:\/\/finderica.com\/?p=10951"},"modified":"2025-02-28T20:16:21","modified_gmt":"2025-02-28T20:16:21","slug":"trumps-no-tax-on-tips-and-no-tax-on-overtime-policies-could-hinge-on-this","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=10951","title":{"rendered":"Trump\u2019s No Tax On Tips And No Tax On Overtime Policies Could Hinge On This"},"content":{"rendered":"\n
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WASHINGTON, DC – JANUARY 20: President Donald Trump signs executive orders in the Oval Office of the … [+]<\/span> White House on January 20, 2025 in Washington, DC. Trump takes office for his second term as the 47th president of the United States. (Photo by Anna Moneymaker\/Getty Images)<\/span><\/p>\n

<\/fbs-accordion>Getty Images<\/small><\/figcaption><\/figure>\n

House Republicans have put themselves in a potential bind. In a razor-thin 217-215 vote on Tuesday, they passed a budget resolution that promises massive tax cuts\u2014but only if they can find $2 trillion in spending reductions to offset the cost. House Republicans are facing a tricky balancing act: finding enough savings to satisfy fiscal conservatives while maintaining the deep tax reductions that Trump and party leadership have promised. If they fall short, the tax cuts will have to be reduced, putting key priorities\u2014including President Donald Trump\u2019s campaign promise of no tax on overtime pay\u2014at risk.<\/p>\n

But a potential escape hatch is gaining traction. Instead of sticking with the traditional current law baseline approach, which treats expiring tax cuts as new costs, Senate Republicans are pushing for a switch to \u201ccurrent policy\u201d baseline. This accounting shift would assume tax cuts, like Trump\u2019s 2017 reforms, are already permanent, making their extension technically cost-free in budget terms. \u201cThe current policy baseline is the only realistic way to make the 2017 Trump tax cuts permanent,\u201d wrote<\/a> Jake Sherman in Punchbowl News<\/em>.<\/p>\n

Forbes<\/span>House Passes Trump Budget Bill: Here\u2019s What It Means For Student Loans<\/span>By Shahar Ziv<\/span><\/small><\/span><\/span><\/span><\/p>\n

The House\u2019s Budget Gamble To Support Trump\u2019s No Tax On Tips And No Tax On Overtime Policies<\/h2>\n

A central focus of the Republican tax agenda is to extend the 2017 Trump tax cuts, which are set to expire at the end of this year and accommodate Trump\u2019s campaign promises like no tax on tips and no tax on overtime. The House\u2019s budget framework operates under a current law baseline, meaning that extending these tax cuts would be accounted for as new expenditures, thereby increasing the projected deficit. Because of this, the House budget bill plans a temporary extension of the tax cuts for the next 10 years.<\/p>\n

The budget resolution that passed the House is built around a simple but strict condition: Republicans must identify $2 trillion in spending cuts over the next decade. If they don’t, the tax cuts they’ve promised\u2014including making the 2017 Trump tax cuts permanent\u2014will have to be scaled back. Given that “the overriding goal of this year\u2019s bill is to extend the expiring provisions,” according<\/a> to The New York Times<\/em>, that may be a tough pill for Republicans to swallow despite the roughly $4 trillion price tag over the next 10 years.<\/p>\n

The problem is that finding those savings won\u2019t be easy. Cutting $2 trillion without touching politically sensitive programs like Social Security and Medicare requires deep reductions elsewhere\u2014likely in discretionary spending, which funds everything from education to defense, a Forbes<\/em> staff report explains. And even if Republicans do find the cuts, they still need to get them through the Senate, where Democrats and some centrist Republicans are likely to push back. \u201cYou do start running out of space to do other things,\u201d said Andrew Lautz, a tax policy expert at the Bipartisan Policy Center, told the New York Times<\/em>.<\/p>\n

The Senate\u2019s Budgetary Loophole To Achieve No Tax On Tips And No Tax On Overtime<\/h2>\n

Recognizing the challenge, Senate Republicans have proposed a workaround: switching to a “current policy” baseline. Under this approach, the budget would assume that existing tax policies\u2014including the 2017 Trump tax cuts\u2014are permanent. Extending them wouldn’t count as new spending, effectively erasing their projected cost on paper.<\/p>\n

This change would help extend the 2017 tax cuts and make it far easier to pass Trump\u2019s latest tax proposals, like no tax on tips and no tax on overtime pay. If these measures don\u2019t have to be paid for in the budget, they become much more straightforward to pass without needing deep spending cuts or new revenue sources.<\/p>\n

House Speaker Mike Johnson (R-La.) has signaled he\u2019s open to this change, which could remove the need for painful spending cuts and dramatically increase the chances of passing Trump\u2019s tax agenda. Sherman, reported<\/a> on X that Johnson \u201cis lining up \u201cwith Senate Majority Leader John Thune \u201din embracing what\u2019s called the \u2018current-policy baseline\u2019 for extending the 2017 tax cuts.\u201d \u201cIt\u2019s a really important principle, and I hope that we can employ that because it makes a big difference in the [cost] calculations,” Johnson told reporters, according<\/a> to Politico<\/em>. \u201cThe Senate wants it. I think the House wants it as well,\u201d he added.”<\/p>\n

This would be a major victory for Trump. His campaign promises to eliminate taxes on tips and overtime pay, would be far more viable under this budget framework. Without the need to offset their cost, these tax breaks could be passed as part of a broader package without the risk of being cut to satisfy deficit concerns.<\/p>\n

A Roadblock To No Tax On Tips And No Tax On Overtime: GOP Deficit Hawks<\/h2>\n

Johnson may struggle to corral everyone in the GOP. Fiscal conservatives and deficit hawks have long opposed budget gimmicks that obscure the actual cost of tax cuts, warning that shifting baselines doesn\u2019t change reality\u2014it just disguises the actual cost of tax cuts. While the “current policy” approach might make tax cuts easier to pass, it doesn\u2019t change the fundamental math\u2014lower tax revenue still means larger deficits unless spending is cut elsewhere. \u201cCurrent policy baseline, I consider it to be a made-up term \u2014 made up to avoid the difficulty of the fiscal impact,\u201d Rep. David Schweikert (R-Ariz.), who chairs the bicameral Joint Economic Committee, which oversees economic policy, told<\/a> The Washington Post<\/em>.<\/p>\n

There is also concern that using this accounting method is a dangerous precedent that could lead to even more aggressive tax cuts without any fiscal discipline. Whether Johnson can bridge this divide could determine if Trump’s promise of “no tax on tips, no tax on overtime” becomes law\u2014or falls victim to budget math.<\/p>\n

High-Stakes Tax Debate Remains To Get To No Tax On Tips And No Tax On Overtime<\/h2>\n

The next phase of budget negotiations will determine whether Trump\u2019s tax proposals\u2014including his promise of no tax on tips and no tax on overtime\u2014can proceed as planned. If Johnson fully embraces the Senate\u2019s accounting approach, these tax cuts have a more substantial chance of passing. But if House Republicans can\u2019t find enough support for this shift, they’ll be left with the same challenge they started: identifying $2 trillion in spending cuts or scaling back their tax-cut ambitions.<\/p>\n<\/div>\n

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WASHINGTON, DC – JANUARY 20: President Donald Trump signs executive orders in the Oval Office of the … [+] White House on January 20, 2025 in Washington, DC. Trump takes office for his second term as the 47th president of the United States. (Photo by Anna Moneymaker\/Getty Images) Getty Images House Republicans have put themselves<\/p>\n","protected":false},"author":1,"featured_media":10952,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[790,2179,374,97,251,962],"class_list":{"0":"post-10951","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-hinge","9":"tag-overtime","10":"tag-policies","11":"tag-tax","12":"tag-tips","13":"tag-trumps"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/10951","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10951"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/10951\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/10952"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10951"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10951"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10951"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}