The Friday Review-Journal front page featured an article in which President Donald Trump’s touted his supposed tax cuts in last year’s tax bill without any critical examination of them. Let’s provide that for your readers.
Yes, tips and overtime pay may be exempt from income tax for some qualifying workers. But even those who qualify will still have to pay payroll taxes of 7.65 percent on those compensations. Accordingly, those workers that make so little as to not pay income taxes won’t get any tax break. In fact, if their tippers reduce or eliminate their tips on the assumption the workers are no longer paying taxes on the tips, the workers’ incomes may go down. So much for the tax breaks for low-income workers.
As for Social Security benefits being exempt from income taxes, that is a misrepresentation. The tax bill contains no such provision. What it does do for seniors older than age 65 is provide for a deduction of up to $6,000, whether or not they receive Social Security benefits. Accordingly, they may receive a lesser or greater benefit from the deduction than if any Social Security benefits were not taxed.
