[light-bulb]

If you work for a company, do you know that your employer only pays taxes on profit?
For example - Hypothetically you are an HVAC guy. You have a customer who purchased a new AC, you installed and delivered it. Your customer paid your company $20k. Your employer deducts the cost of the product, shipping, mileage, insurance, all employee costs, facility etc. They then may pay taxes on say 2k in profit. The customer already paid taxes on their money so now the government gets to re-tax on 2k of profit.
However for tips from a person to a person, there is very little deduction. So you collect $4k in cash tips, which is already likely been taxed on the customer side, and now the cash is re-taxed again, almost in it’s entirety. It’s horrible from an overall tax perspective because it is just one example of how broken our taxation system is.

[moovova]

I didn’t know that. Thanks.

[Svartalfiar]

They then may pay taxes on say 2k in profit. The customer already paid taxes on their money so now the government gets to re-tax on 2k of profit.

If the government couldn't tax dollars that were 'taxed previously', tax revenue would go to zero. Every single dollar goes back at some point to someone getting taxed on it. All those business expenses that hvac company subtracted from their income, gets taxed when they paid the install guy, or the profit at the company they bought parts from. Which then repeats back and back and back.

Unless it'sfresh off the press, every dollar has likely been taxed at tens or hundreds of times its face value over its life.