Donald Trump calls for ending taxes on tips, drawing mixed reaction from Republicans

NBC News ^ | June 18, 2024 | Scott Wong and Sahil Kapur

[Red Badger]

While many Trump allies cheer the fledgling idea, which the former president has been touting lately, other conservatives are skeptical. One analysis says it'd cost up to $250 billion.

WASHINGTON — In his private meeting with Senate Republicans last week, former President Donald Trump joked that a new campaign pitch has made him very popular with the caddies at his golf course near Mar-a-Lago: ending taxes on money earned from tips.

It’s an idea that was cheered in the room of senators and one that Trump is likely to return to as he courts working-class voters in swing states with large service industries, like Nevada, Arizona and Georgia, in his rematch this fall with President Joe Biden.

But it's unclear whether the election-year talking point will materialize as a serious policy plan on Capitol Hill. Several influential Republicans told NBC News they're skeptical of the idea, citing the rising national debt and questioning whether it would be fair to earners who don't make tips.

Trump also mentioned his desire to end taxes on tips in an earlier meeting with House Republicans, said Rep. Tim Burchett, R-Tenn, who added that Trump recounted to lawmakers how a waitress gave him the idea.

“This thing has really just organically caught fire,” Burchett, a Trump ally, said Monday, calling Trump's proposal “smart politics.”

Three GOP senators who listened to Trump’s remarks in a separate closed-door meeting mentioned his tax-and-tips pitch, unprompted, as they left last week. Sen. Ted Cruz, R-Texas, a onetime Trump rival, said that the idea is “terrific” and that it could shift voter perceptions of the parties.

“For someone that’s working as a waiter or waitress or someone that’s working as a taxicab driver or someone who’s working as a bellhop at a hotel, there are a lot of people who are starting to climb the economic ladder who rely on tips,” said Cruz, who faces his own re-election battle this year in Texas. “The caricature of Republicans is that Republicans were the party of the rich and Democrats are the party of the poor and the working class.”

Other Republicans are skeptical of the fledgling proposal.

“I don’t know about just making a unilateral decision about tips versus focusing on workers generally,” Rep. Chip Roy, R-Texas, an influential conservative, said in an interview. “Like, why would you favor tip-earners versus another person who makes similar wages? ... That might even pose some legal questions in terms of how you’re treating one person versus another.”

“The idea of making sure that hard-working families are not being burdened by taxes? Good. Differentiating between tips versus non-tip, not sure I fully buy that,” Roy said.

Rep. Vern Buchanan, R-Fla., the vice chair of the tax-writing Ways and Means Committee, also said he’s not sold on the idea of reclassifying how tips are taxed, citing the growing national debt.

“You’ve just got to be careful with it. We’re running these trillion-dollar deficits. Got to be careful with all of this.,” Buchanan said. “I want to be sensitive, because they work hard. And obviously a big part of their earnings is tips. All these programs sound good; everybody likes to pay less taxes. But we got to pay the bills.”

According to the IRS, all cash and non-cash tips are subject to federal income taxes. That means Congress would need to step in and pass a law to exempt tips from being taxed in the future. Major parts of the Trump tax cuts expire at the end of 2025, and, if he's elected, Trump's idea about tips could land on the menu for policymakers looking to rewrite the tax code.

Such a move would have significant impacts on the debt.

The Committee for a Responsible Federal Budget, a research group that advocates for cutting red ink, estimated in a paper Sunday that exempting tips from income and payroll taxes could cut federal revenue by as much as $250 billion over 10 years.

Asked whether the campaign has policy details or a cost estimate, Trump spokeswoman Karoline Leavitt said in an email: “President Trump intends to ask Congress to eliminate taxes on tips to put more money back in the pockets of hardworking service workers. On the contrary, Joe Biden has aggressively stepped up the IRS going after tip workers.” (The White House says the extra IRS funds Biden secured are about improving customer service and targeting wealthy tax evaders, not low- or middle-income earners.)

Lael Brainard, a top Biden White House adviser, responded cautiously when she was asked about Trump’s tip idea, citing the Hatch Act prohibitions on political activity by West Wing officials.

Broadly, Brainard told reporters in a call last week, Biden has “fought for real solutions that actually address workers’ legitimate need for fair wages” and has better ideas for Nevada wage earners — including a higher minimum wage and overtime protections.

“So our view is that the meaningful set of policy changes that would really lift the living standards of Nevada workers and workers all around the country would be to raise the minimum wage and eliminate the tipped minimum wage, leading to $6,000 more in income per year,” she said.

A day after he visited Capitol Hill, as he celebrated his 78th birthday with supporters at the West Palm Beach Convention Center in Florida, Trump retold the story of the tips proposal in greater detail. He was at a restaurant in Las Vegas and asked a waitress what it would take to win her vote. She told him to eliminate taxes on tips, Trump said. To spread the word, he then instructed his supporters to write on their restaurant receipts: “Vote for Trump because there’s no tax on tips.”

A Trump loyalist, Rep. Marjorie Taylor Greene, R-Ga., did just that, tweeting a photo of a receipt with the message "VOTE TRUMP! no tax on tips!!"

Rep. Byron Donalds, R-Fla., another Trump ally, also cheered the idea.

“Listen, as a former waiter — I waited tables in college and a little bit after college — I think we should definitely do that,” Donalds said. “Waiters, waitresses, service staff — they work hard every day. They work hard, and they’re not millionaires. To go after them like that doesn’t make any sense to me.”

And Sen. Kevin Cramer, R-N.D., who relayed Trump’s story about his caddies, also sees the tips proposal as a way to win over voters: “The tips issue is good for Trump and Republicans. Working-class voters have not been this pro-Republican since Reagan,” Cramer said in a brief interview Monday.

Burchett said the economic impact would be positive despite the red ink the policy could create.

“I’m of the belief that these folks aren’t going to stuff that in a mattress or bury it in a Mason jar in your backyard. They’re going to put it back in the economy pretty quick,” he said. “I would rather Americans invest that rather than the federal government steal it.”

[Red Badger]

"COST $250 Billion"?

It wouldn't 'cost' a damn thing!

These people are economic morons...............

[ConservativeMind]

I see voluntary tips as gifts, which should never be taxed.

[larrytown]

“You’ve just got to be careful with it. We’re running these trillion-dollar deficits. Got to be careful with all of this.,” Buchanan said. “I want to be sensitive, because they work hard. And obviously a big part of their earnings is tips. All these programs sound good; everybody likes to pay less taxes. But we got to pay the bills.”

Or...you could just 'CUT SPENDING'.

[Lurker]

“Buchanan said. “I want to be sensitive, because they work hard. And obviously a big part of their earnings is tips. All these programs sound good; everybody likes to pay less taxes. But we got to pay the bills.”

Maybe you clowns could stop spend money we don’t have.

Just a thought.

L

[mikelets456]

True. Instead of these fake feel good “$20 hour” wages, just get rid of income tax and property taxes. That way, people would have so much more disposable income. Also, if our government stopped printing and spending we would not need all the feel good government mandated wages.

[PGalt]

HOORAY 47. Demons sucking the blood out of over-taxed, hard-working Americans.

[mikelets456]

You mean “ cut corruption and wasteful spending” which is over 95% of it.

[gathersnomoss]

What has the federal government done FOR you lately? What is it costing you?

[Jim W N]

One analysis says it'd cost up to $250 billion.

Cost who? The gov't. Who the hell cares what the cost is to the feds that is 80%+, $3+ trillion unconstitutional?

[Rlsau1]

“Or...you could just ‘CUT SPENDING’”

Evidently, the world as we know it would come to an end if Washington were to act responsibly and live within the $trillions it already takes in. Just too many parasites living off OPM (other people’s money).

[Bob434]

The left are giving our money, which amounts to over a trillion dol.ars a year when. Everything is factored in, to house, feed educate, plus incidental costs related to their criminal activities etc etc etc illegals

I have stats in my profile page which were from decades ago which had the esti ate back then at between $400-$600 billion- I’m sure that has climbed to over a trillion today given how many illegals have poured in to our nation

Imagine if we stopped paying a trillion or so a year on crim8nals who have broken our laws, and Instead helped out law abiding citizen low wage earners have a better life I stead

[allendale]

Any waiter or waitress dumb enough to declare a cash tip should pay taxes on it. Problem these days is that the “tip” is already on your bill and often paid by credit card. Cash gives people freedom . That is why the government wants a “cash free” society.

[Jim W N]

How about CUT TAXES AND SPENDING?

Gee, what a thought.

The federal gov’t which is 80%+, $3+ trillion unconstitutional (i.e. illegal) is the greatest threat to our lives, freedoms, and country.

[eyeamok]

He should be callinb for a repeal of the 16th amendmnet and going back to 100% tariff funding of government if he really wants to start the fire to burn it all down.

[PGalt]

Yes, STOP spending. Approaching 35 trillion in debt. We the citizens are overtaxed debt slaves to BIG GOV.

[JayGalt]

Trump also suggested he would eliminate income tax and institute higher tariffs to fund the Government. That has raised quite a few hackles & naysayers. However those naysayers are not used to thinking outside the box.

Eliminating the IRS would save a great deal of money. Eliminating a few other Departments like the Department of Energy would save more. The $ spent on tax prep, tax planning & tax attorneys would plummet.

A tax on purchases with shielding of groceries, necessities, and non luxury goods would generate federal $ with a very small bureaucracy and would encourage savings.

The tariffs would shield American industry and encourage foreign companies to build plants in the USA with resultant job creation and cheaper goods since they would not need to be shipped internationally.

[larrytown]

At this point, cutting anything would be a start - it would at least show that they’ve heard of the concept.

[know.your.why]

I see voluntary tips as gifts, which should never be taxed.

Ditto. Gifts. Hustle reward. These ppl bust their ass...some of them...so I like to say thank you. None of them are getting rich ffs.

[dfwgator]

"I'm very sorry the government taxes their tips, that's ______ up. That ain't my fault. It would seem to me that waitresses are one of the many groups the government ____ in the ass on a regular basis. Look, if you ask me to sign something that says the government shouldn't do that, I'll sign it, put it to a vote, I'll vote for it, but what I won't do is play ball. And as for this non-college bullsh__ I got two words for that: learn to _____' type, 'cause if you're expecting me to help out with the rent you're in for a big _____' surprise."

[Alberta's Child]

If I had my way I would adopt two related policies:

1. Eliminate the lower minimum wage for service workers who get tips.

2. Eliminate income taxes on tips.

You can’t do #2 without doing #1. Federal law, and many state laws, allow these workers to be paid less than the minimum wage, but only if their combined wages and tips meet or exceed the federal or state minimum wage. So employers are required to track the tips paid to their employees anyway, and end up reporting it as taxable income on the W-2 forms of the employees.