Donald Trump at Arizona rally promises no taxes on overtime payments if elected

Republican US presidential candidate and former president Donald Trump proclaimed that he will end all taxes on overtime payments as part of a tax cut package if he is elected president in the upcoming November 5 election.

"As part of our additional tax cuts, we will end all taxes on overtime," he said during a rally in Tucson, Arizona. "Your overtime hours will be tax-free."

Trump is in a tight race, as numerous polls have shown so far, against the Democratic nominee and the current Vice President Kamala Harris. Trump has said in the past that he would support legislation that reduces or, simply, end taxation of tips to aid service workers.

His opponent, Kamala Harris, also made a similar promise.

A Harris campaign spokesperson responded to Trump’s claims on Thursday, saying, "He is desperate and scrambling and saying whatever it takes to try to trick people into voting for him.”

Harris, earlier this month, said in a rally with union workers, accused the former president of blocking overtime payments for millions of workers during his presidential tenure, which was from 2017 to 2021.

The Trump administration did, in fact, issue in 2019 a rule which increased the eligibility of overtime pay to around 1.3 million additional US workers.

The new rule replaced a proposal introduced by President Barack Obama, and was considered comparatively more generous.

Trump raised the salary threshold for exemption from overtime pay to $35,568 a year, up from the previous and long-standing $23,660 limit. The move was frowned upon by workers’ rights groups, many of which admitted it covered far fewer workers than the scheme introduced under the previous president.

The beneficiaries of overtime pay at such income levels are overwhelmingly blue-collar workers like the waiters that serve you food, fast-food workers, nurses, store runners and other low-income workers.

"The people who work overtime are amongst the hardest working citizens in our country and for too long no one in Washington has been looking out for them," Trump said on Thursday.

Under Labour Department rules, eligible workers are to be paid at least one-and-a-half for hours worked above 40 hours in a single week.

Data from the Bureau of Labour Statistics showed that, as of last month, factory workers in non-supervisory roles put in an average of 3.7 hours of overtime a week, according to Reuters.

According to the nonpartisan Congressional Budget Office, untaxed overtime would take away from government revenue. The former president’s plan to permanently extend the tax cuts he passed as president, therefore, would increase the U.S. deficit by $3.5 trillion by 2033. The US budget deficit in the first 11 months of the current fiscal year is $1.9 trillion.

How much revenue the government receives from taxed overtime pay, however, is unclear.

This year, Alabama became the first state to exempt overtime pay for hourly workers from state taxes as a temporary measure.

The move won support in the legislature to help employers fill up their job vacancies in a scarce labour market. The exemption, however, will only last for 18 months.