Trump's Tax Plan: Billions in Lost Revenue as Congress Moves to Exempt Tips and Overtime

Congress is considering legislation that would eliminate federal income tax on tips and overtime pay. This initiative, initially a campaign promise by former President Donald Trump, has gained traction and is approaching its enactment into law. The Congressional Budget Office projects that the exemption for overtime would result in a $124 billion loss in tax revenue, while the tax break on tips would reduce tax collections by $40 billion. Despite the substantial financial implications, public support for the policy is considerable, with approximately 75% of voters expressing approval in a recent poll. However, critics argue that the exemptions would distribute the tax burden unfairly, potentially leading to higher tax bills for hourly wage earners compared to those in tipped positions. This disparity could also shift the demand for jobs that involve tips or overtime, potentially creating worker shortages in other sectors. The debate highlights the complex interplay between political promises, economic realities, and public opinion.