Here's How Donald Trump Is Shrinking Your Paycheck
Congressional Republicans are planning to push through a
wildly unpopular tax plan
that largely benefits business owners and the wealthiest Americans.
To sell it, the White House is saying that every American will benefit from the bill in the form of an extra $2,000, and they've dubbed Donald
That all sounds pretty good. Personally, I'd love an extra $2,000. But as always, there are nuances.
Based on the information we have now about the tax plan, the cuts are short-lived for individuals, largely fading within 10 years, even as corporations continue to enjoy their massive cuts. They're also not as generous as the GOP is touting: independent analyses have put the cut closer to $1,200 in 2019 , or about $23 per week. And the wealthiest Americans will benefit far more than the middle class, as Howard Gleckman, a Forbes contributor, notes :
On average, a wage earner in the top 1 percent would get a 2019 tax cut of about $8,700 while a business owner would pay $87,000 less.
Additionally, the Tax Policy Center contends most people will actually be worse off when you consider the things Congress will have to do to make up for the estimated $1.4 trillion loss in revenues that could result-including things like cutting Social Security, Medicare, and Medicaid .
All told, "Paycheck President" is a rather-and this might surprise you-disingenuous moniker, as Vox's Matt Yglesias pointed out on Twitter, given other measures the Trump administration has taken that don't exactly benefit workers.
Let's break it down.
Currently, employers must pay overtime to most salaried workers earning less than $23,660 per year, a figure that hasn't changed since 2004. The Department of Labor, under the Obama administration, issued a rule last year that would increase that threshold to $46,476, expanding eligibility to more than 4 million workers.
Business groups and 21 states challenged the rule, arguing the DOL had overstepped its authority, and a federal judge struck it down in August. In September, the Justice Department declined to defend it.
There is some potentially good news for workers: the Trump Administration has said it would increase the salary threshold-just not to $46,476. So far, nothing as transpired. But an increase in wages for 4 million workers would likely be a better way to increase their paycheck than a one-time tax cut they may not even benefit from.
Equal Pay Rule
Also in August, the Trump administration halted an Obama-era rule that would have required large companies to report salary information broken down by race and gender to the Equal Employment Opportunity Commission.
The so-called Equal Pay rule was intended to help bridge the gender wage gap by making pay across industries more transparent. Opponents, including Ivanka Trump , said it would be burdensome to businesses and ultimately make no difference in wage disparity.
Sorry, women who thought this might help close the $500,000 to $1 million in lifetime pay disparities you face-maybe you can put that $1,200 toward some Bitcoin?
This month, the DOL introduced a rule that would require waiters and other tipped-workers to split tips with their co-workers and potentially managers if they earn at least the federal minimum wage, reversing an Obama-era rule (noticing a theme?) that stipulated tips belonged to the worker who received them.
The Trump admin says this will help service workers who aren't usually tipped, like cooks and dishwashers. Opponents say it would allow employers to steal workers' tips. The left-leaning Economic Policy Institute estimates employers would pocket $5.8 billion of workers' tips because the rule does not stipulate that employers need to distribute the tips after pooling them.
The Fiduciary Rule
The Obama-era Fiduciary Rule would have required financial advisers to work in their clients' best interests when advising them on retirement investments. Currently, commission-based advisers can sell you products that tack on an extra fee, even if there are other, fee-free products that are just as good-and even something seemingly as small as 1% makes a huge difference in the long run.
Though it was set to go into effect this year, the DOL has repeatedly delayed its enforcement, meaning people saving for retirement may still be sold these fee-ridden products. What does this cost investors? According to the Economic Policy Institute, about $10.9 billion over 30 years (fees compound!). But maybe that $1,200 tax cut will make up for it.