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Axios
2 days ago
- Business
- Axios
Trump's "big, beautiful bill" stops short of "no tax on tips" promise
The fine print in President Trump's recently signed"big, beautiful bill" could restrict savings for some tipped workers. Why it matters: Trump made "no taxes on tips" a centerpiece of his presidential campaign — and while a provision in the new law honors that idea on the surface, it doesn't eliminate all taxes. Here's what to know: How does the "big, beautiful bill" impact tipped workers? State of play: A qualifying worker's first $25,000 in tips are exempt from income taxes. Tipped workers will still pay 7.65% in payroll taxes that fund Social Security and Medicare. The law shouts out food service and cosmetics industry workers specifically, stressing that the tax exemption will apply "only to certain lines of business." By the numbers: The tax deduction would decrease once a worker's income hits $150,000 — decreasing further at $300,000. Tipped workers filing a joint return with spouses would also see less of a deduction. The law also requires workers to provide their Social Security numbers — as well as any spouses — making undocumented workers ineligible for the tax break. Undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022, per the Institute on Taxation and Economic Policy (ITEP). When does the tax provision go into effect? The law will apply to the current tax year, including tips already accrued. How many tipped workers are there? About four million people in the U.S. earned tips in 2023, according to Yale University's Budget Lab. That's 2.5% of all workers. Two-thirds of restaurant workers who work for tips earn so little that they don't pay federal income taxes, per a 2024 report parsing data from the Census Bureau's American Community Survey. Workers are currently taxed on tips, which puts an added financial strain on a demographic that tends to be lower income. The median weekly wage for tipped occupations in 2023 was $538, versus $1,000 for non-tipped workers, per the Budget Lab. What did Trump promise tipped workers on the campaign trail? "No tax on tips" began as a promise Trump made during a 2024 campaign stop in Nevada. It has since become a top talking point for Republicans as they've promoted their megabill. The intrigue: "No tax on tips" has emerged as a rare bipartisan, populist policy. Former Vice President Kamala Harris adopted the promise as a part of her own presidential campaign two months after Trump did. In May, the Senate passed a separate "No Tax on Tips Act" in a surprise move, which no lawmakers — Republican or Democrat — objected to. Will no taxes on tips help tipped workers?
Express Tribune
4 days ago
- Business
- Express Tribune
The big cruel ‘beauty' of Trump's bill
In a cruel twist of irony, America's Independence Day is being celebrated with the largest upward transfer of wealth in the country's history. By signing the so-called 'Big Beautiful Bill' into law on July 4, President Donald Trump has turned Robin Hood into a bogeyman – and made the rich the rightful folk heroes. With the sweeping tax-and-spending package, Trump has unleashed a legislative juggernaut that brings Karl Marx's warning into brutal focus: 'Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery at the opposite pole.' The bill robs the bottom 90 per cent of Americans of around $700 per household, while funnelling over $6,000 into the pockets of the wealthiest fifth, engineering misery on an industrial scale. With Yale's Budget Lab and the Congressional Budget Office projecting a $3.4 trillion hole in the federal budget over the next decade – before counting interest – it is an ideological project in plutocratic redistribution. In a staged heist against the social safety net, Medicaid, SNAP, clean energy credits and even lifesaving foreign aid are set to become collateral damage in a grand design to enrich the few and abandon the rest. It is a dagger at the heart of America's social contract. Or, in Bernie Sanders' remarks on the floor of the Senate: 'It is the most dangerous piece of legislation in the modern history of our country.' 'It is a gift to the billionaire class, while causing massive pain for low-income and working-class Americans. Actually though, M. President, I'm wrong. This is not a gift to the billionaire class. They paid for it,' he quipped. In Arkansas alone, more than 100,000 people stand to lose their Medicaid coverage. Food stamp recipients will now face stiffer work requirements, a bitter irony at a time when grocery bills are soaring and rural job markets remain fragile. Across the country, the implications are chilling. Already struggling rural hospitals may face accelerated shutdowns. Families living paycheck to paycheck will be squeezed even harder. At the same time, tax cuts for billionaires are made permanent, fossil fuel subsidies are revived with a vengeance and the deficit balloons by an additional $3.5 trillion. Who wins and who loses? Independent analyses from the CBO and the Joint Committee on Taxation (JCT) show that the bill will kick 16 million people off their health insurance, gut nutrition programmes and make college even harder to afford — all to bankroll massive tax cuts for the wealthiest Americans. The bill adds a whopping $3 trillion to the national debt, setting the stage for long-term economic drag and a grim inheritance for younger generations. Households making under $23,000 will lose around $1,600 annually, mostly from Medicaid and SNAP cuts, nearly 4% of their total income. Families earning under $55,000 a year will see a net loss in resources. Meanwhile, the middle class gets table scraps, a meagre 0.5–0.8% gain, barely enough to offset rising living costs. At the top, it's raining gold. Households making over $700,000 will gain $12,000 a year, not counting estate tax windfalls. Meanwhile, the top 10% rake in 68% of the bill's total benefits. Those earning over $500,000 will receive a $168 billion tax cut in 2027 alone while people making over $1 million will see a $93.6 billion tax windfall that same year. For the lowest earners, the pain is twofold: many will actually see tax increases, with those making less than $15,000 a year facing a 12% hike in 2027, ballooning to 73% by 2033 once temporary credits expire. Even crueller than the 2017 Tax Cuts and Jobs Act, the grandly-titled bill doles out nearly double the tax break to millionaires while stripping aid from those who need it most. In fact, TCJA at least gave modest cuts to low-income earners, but the "beauty" of Trump's latest attack lies in its spectacular theft. Generational theft The long-term hit is generational. Penn Wharton's model finds that a 40-year-old median-income earner will lose $7,500 over a lifetime under the bill. However, a 70-year-old with the same income will be $17,500 richer. In other words, the American Dream has been restructured into a senior savings plan, just hang in there till retirement and hope capitalism does not kill you first. For the young, the pursuit of happiness now comes with a warning label: not applicable during your lifetime. In a nutshell, the bill is a ledger of who matters and who does not in Trump's America. The arithmetic is brutally simple: if you're a CEO, hedge fund manager or a defence contractor, your stock just went up. However, if you are a working-class parent, a disabled veteran, a retiree or a single mother in rural Arkansas, you're collateral damage in a cynical calculation. While older, higher-income Americans stand to gain in the short term through generous tax breaks, younger workers and future generations are left footing the bill, both figuratively and literally. Because younger earners are typically in lower tax brackets, they benefit the least from income tax cuts. At the same time, they are disproportionately exposed to deep cuts in Medicaid and student aid — two critical lifelines for young families and students. Medicaid now covers four in ten hospital births in the US, meaning today's cuts are tomorrow's childhood health crises. As Jessica Riedl of the conservative Manhattan Institute puts it, even from the right: 'In the short term, the benefits are certainly tilted towards higher earners, which is often a good proxy for age.' However, the heaviest blow comes in the form of long-term debt. The bill adds $3 trillion to the national debt, which economists predict will push interest rates higher and eat away at future federal budgets, squeezing out investment in education, infrastructure and social services. 'There is an obvious intergenerational transfer here,' says John Ricco of the Yale Budget Lab, which estimates that by 2055, when today's newborns turn 30, the average annual mortgage will cost $4,000 more because of the bill's impact on interest rates. 'Making America white again' Moreover, the bill's border provisions read like the fevered dreams of a security‑state lobbyist. ICE's budget balloons by an order of magnitude, rippling from roughly $10 billion today to over $100 billion in a few short years. Funding for walls, detention facilities and mass deportations soars, reflecting a dark fusion of nationalist spectacle and capitalist discipline. Immigrants, refugees and asylum‑seekers become pawns in a broader project of social control, as the state draws lines in sand and steel across its own land. The Pentagon budget is padded by another $150 billion, ICE gets tens of billions for deportations and even a private border-enforcement army and massive wall project are shoehorned in. In short, if $1 is cut from Medicaid, $1.50 flies to police and walls. As Washington Monthly notes, the bill 'lavishes funding on ICE to raise a private army and set up detention camps'. The movement 'is primarily about… 'owning the libs,' 'Making America White Again,' and cruelty against the marginalised'. Public opinion polls tell the rest of the story: close to half of Americans – 49 per cent – oppose the Big Beautiful Bill, while only 29 per cent support it. Even within Republican ranks, fiscal hawks and swing‑district representatives bristled at the eye‑popping deficits and social carnage baked into the legislation. Three‑headed hydra of class warfare From a leftist vantage point, the Big Beautiful Bill is a three‑headed hydra of class warfare, eco‑fascism and bio‑political abandonment. It rebrands austerity as patriotism, casting the poor as 'undeserving' parasites even as it showers the wealthy with boons. By shredding Medicaid, SNAP, and foreign‑aid programs, lawmakers legislate life‑and‑death outcomes for the poor, the elderly, children abroad and immunocompromised Americans alike. Green betrayal Climate leftists see the bill as an eco‑fascist manifesto: a blueprint for resource control through environmental destruction, with the state's coercive machinery gearing up to enforce a fossil‑fuel future at gunpoint. Perhaps the ugliest manifestation of the 'beautiful bill' is in its astonishing show of capitalism's climate death drive, an embrace of catastrophe for private profit, where planetary care is too high a price to pay. The bill's architects also saw fit to annihilate the scaffolding of the clean‑energy transition. With the stroke of a pen, the EV tax credit that buoyed nascent electric‑vehicle markets vanishes, wind and solar developers find their pipeline choked off and carbon‑capture investments are relegated to the dustbin. Environmental finance specialists forecast the loss of up to 250,000 clean‑energy jobs, even as household electricity bills spike by double digits. In effect, the legislation slams on the brakes of climate progress while flooring the accelerator on fossil‑fuel extraction – an eco‑dead end if there ever was one. The bill quietly scraps much of the Biden administration's clean-energy agenda. Solar and wind tax credits are repealed, even as fossil fuel subsidies persist. Analysts warn that by punishing solar and wind generation the law will devastate energy grids in red states like Texas. The bill is an eco-political undoing: the countryside continues to flood and burn while lawmakers dismantle the very buffers — renewables, efficiency programs and green jobs – that could soften the blow. Instead of weaning us off coal and oil, Congress doubles down on drilling and emissions, casting our children as future sacrifices. The irony is cruel: at a moment of record wildfires and hurricanes, politicians fetishize fossil fuel profits. By design, the working forests and windmills of tomorrow become victims to drive short-term windfall. The bill's very 'beauty' is in its ritualised cruelty. It taps into a perverse collective glee, inviting supporters to revel in the punishment of the 'lazy' and 'undeserving,' all while the architects of the legislation themselves benefit. The broader lesson is clear: the Big Beautiful Bill is the Empire striking back (internally, on its own unwanted), wielding fiscal hammers and regulatory scalpel alike to carve out a new world order – one where the poor are expendable, the planet dispensable and the state an instrument of predatory elites. It is a monstrous legislative conflation of class warfare, climate sabotage and state violence – an apex of neoliberal authoritarianism.
The Star
7 days ago
- Business
- The Star
US job growth expected to slow in June, unemployment rate forecast to rise
WASHINGTON: The U.S. labor market likely slowed further in June, with the unemployment rate expected to have edged up to more than a 3-1/2-year high of 4.3%, as economic uncertainty stemming from the Trump administration's policies curbed hiring. The anticipated moderation in job growth will probably be insufficient to spur the Federal Reserve to resume its interest rate cuts in July, with the Labor Department's closely watched employment report on Thursday also expected to show solid wage gains last month. The report is being published early because of the Independence Day holiday on Friday. A string of indicators, including the number of people filing for state jobless benefits and receiving unemployment checks, has pointed to labor market fatigue after a strong performance that shielded the economy from recession as the U.S. central bank aggressively tightened monetary policy to combat high inflation. Economists say President Donald Trump's focus on what they call anti-growth policies, including sweeping tariffs on imported goods, mass deportations of migrants and sharp government spending cuts, has changed the public's perceptions of the economy. Business and consumer sentiment surged in the wake of Trump's victory in the presidential election last November in anticipation of tax cuts and a less stringent regulatory environment before slumping about two months later. "It's a very uncertain time," said Martha Gimbel, executive director of the Budget Lab at Yale University. "It's just hard for people to make decisions right now." Nonfarm payrolls likely increased by 110,000 jobs last month after rising by 139,000 in May, a Reuters survey of economists showed. That reading would be below the three-month average gain of 135,000. Estimates ranged from a rise of 50,000 to 160,000 jobs. Average hourly earnings are forecast to jump 0.3% after advancing 0.4% in May. That change would keep the annual increase in wages at 3.9%. Economists estimate the economy needs to create between 100,000 and 170,000 jobs per month to keep up with growth in the working-age population. They will be watching for revisions to the April and May data. Revisions this year have been skewed to the downside. Some economists speculated that small businesses were filing late responses to the establishment survey, from which the nonfarm payrolls are derived. "Whatever the cause of the revisions, the established pattern means it makes sense to subtract about 30,000 from the first estimate of June payrolls and to focus on the trend rather than one month's numbers," said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. Much of the slowdown in job growth reflects tepid hiring. Layoffs remain fairly low, with employers generally hoarding workers following difficulties finding labor during and after the COVID-19 pandemic. RISING LAYOFFS But layoffs are picking up and the lackluster hiring means fewer opportunities for those who lose their jobs, accounting for the anticipated uptick in the unemployment rate. A survey from the Conference Board last week showed the share of consumers who viewed jobs as being "plentiful" dropped to the lowest level in more than four years in June. The expected rise in the jobless rate last month to the highest level since October 2021 would follow three straight months in which it held steady at 4.2%. Most economists expect the unemployment rate will continue rising through the second half of this year, and potentially encourage the Fed to resume its policy easing cycle in September. The Fed last month left its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December. Fed Chair Jerome Powell on Tuesday reiterated the central bank's plans to "wait and learn more" about the impact of tariffs on inflation before lowering rates again. "We are starting to see some important shifts that perhaps paint a worse light on the jobs market than most people have been thinking," said James Knightley, chief international economist at ING. "I don't think June's report is going to be weak enough to make the case for a July rate cut, but the risk is that the Fed is starting to think ... perhaps we need to put a bit more emphasis on where the jobs numbers are heading now." Some economists, however, see limited scope for the unemployment rate to rise as the immigration crackdown shrinks the labor pool. With the White House having revoked the temporary legal status of hundreds of thousands of migrants, economists said fewer than 100,000 additional jobs per month would likely be needed to keep the jobless rate stable. The healthcare sector likely continued to dominate the job gains last month. But leisure and hospitality employment could have been curbed by some migrants staying home in fear of being rounded up for deportation. Similar concerns could also have affected construction payrolls, while tariffs probably continued to weigh on manufacturing employment. Moderate federal government job losses likely persisted. The administration's unprecedented campaign to drastically shrink the federal workforce has been tangled in legal fights. "The mass of federal layoffs, the voluntary retirements and any reductions in force probably do not slow payrolls until October," said Michael Gapen, chief U.S. economist at Morgan Stanley. "Also, there has been little evidence yet of slower federal government hiring." - Reuters
Bloomberg
01-07-2025
- Business
- Bloomberg
Richest 20% Get Income Boost in Trump Tax Bill
Ernie Tedeschi, director of economics at the Yale Budget Lab, breaks down the potential impact of the Trump tax bill on both the economy and American families as the bill heads back to the House of Representatives. (Source: Bloomberg)
New York Times
01-07-2025
- Business
- New York Times
Poorest Americans Dealt Biggest Blow Under Senate Republican Tax Package
Millions of low-income Americans could experience staggering financial losses under the domestic policy package that Republicans advanced through the Senate on Tuesday, which reserves its greatest benefits for the rich while threatening to strip health insurance, food stamps and other aid from the poor. For many of these families, the loss of critical federal support is likely to negate any improvements they might have seen as a result of slightly lower taxes, experts said. That reality could undercut Republican lawmakers and President Trump, who insisted anew this week that their legislative vision would benefit the entire economy. The latest evidence arrived in the hours before lawmakers finalized their signature legislation. Studying a since-amended version of the Senate bill, experts at the Budget Lab at Yale, a research center, concluded Monday that it would parcel out its benefits disproportionately. Americans who comprise the bottom fifth of all earners would see their annual after-tax incomes fall on average by 2.3 percent within the next decade, while those at the top would see about a 2.3 percent boost, according to the analysis, which factors in wages earned and government benefits received. On average, that translates to about $560 in losses for someone who reports little to no income by 2034, and more than $118,000 in gains for someone making over $3 million, the report found. Martha Gimbel, the co-founder of the budget lab, described the Senate measure as 'highly regressive.' The disparity owes largely to the fact that Republicans aim to pay for their tax cuts by slashing programs for the poor, including Medicaid and food stamps. The cuts amount to one of the largest retrenchments in the federal safety net in a generation. But the savings they generate only offset a fraction of the total cost of the bill, which is expected to add more than $3 trillion to the federal debt by 2034. Want all of The Times? Subscribe.
