Posted on 06/19/2024 6:38:01 AM PDT by 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.”
So how is he going to “pay people to have babies”??? I noticed he didn’t say citizens or taxpayers. We all know how corrupt the monthly Covid checks he sent out were.
Have done accounting since 1957.
AGREED.
IT is a GIFT....NOT TAXABLE.
“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.”
These morons don’t have a clue as tipped employees, as a whole, make about $2.15 per hour plus their tips. A far cry from the “minimum wage”. If it wasn’t for the tips, they wouldn’t survive. The real good ones have excellent people skills and provide top-notch service. Service being the key word.
Maybe these clowns should stop fleecing US and enriching themselves through graft as well as other means. Remind me again how many billions have been wasted on the most corrupt country in the world?
I think we are way past the Byzantine out of control tax system and the issues. Fair share! loop holes! ETC!
I would favor getting rid of Fed income tax and replace entirely with a natl sales/ VAT.
massively downsize the IRS..
Added bonus, it gives the tax payers a direct way to voice their opinions, BUY nothing/ tax protest days. for that reason alone it will never happen..
He also saving social security. These workers who don’t include tips in income will get significantly smaller social security checks. In fact, they’ll end up getting the bare minimum.
And they say $250BN “over” ten years, which means that it’s “only” $25BN per year and also since they are clearly trying to scare us they probably exaggerated even the $25BN number, so it’s more likely to be $15Bn a year. Trump could save $250BN a year just by ending the one war in Ukraine.
“Tax expenditure” is the phrase used by Econocrats to calculate the “cost” (foregone revenue) of every deduction, allowance, or credit.
It is premised on the notion that the government has a right to 100% of a flat rate of income.
Any Orthodox, Traditional, Establishment, Blue-blood, Old-Money Republican who is opposed to this idea ought to be run out of the party.
If you are getting a minimum wage of say $15/hour as a waiter, the same minimum wage as everyone else, the 15% to 20% tip for average to very good service era is past.
Your tip might be $1 to $3 for average to very good service per person served. The total amount of tip income in uniform minimum wage areas will be far less.
These smaller tips will be much better appreciated and worked for if untaxed (by the federal government at least).
Also.... which f’n administration was it that decided to start taxing tips to begin with. Seems like Clinton but the memory is foggy.
Looking at each of these, is looking at the trees.
The forest, however, spells NESARA. The National Economic Security and Recovery Act. Calls for a national sales tax, solely on new items, abolishes the FED/IRS, moves to a PM-based financial system.
They shouldn’t be taxed and they shouldn’t be split among others. Good service usually equates to good tips. At least it did in the old days.
It goes right back into the economy instead of being wasted by the governments trough.
“Trump also suggested he would eliminate income tax and institute higher tariffs to fund the Government”
The federal government spends about $6 trillion/year.
That’s about $20,000/year/American citizen.
Taxing $15 Big Macs or even two million $60,000 Teslas is not going to cover that amount of spending.
This is the problem other politicians have with this idea. Similar to when Bush suggested Tort Reform to limit liabilities that insurance companies pay.
To lower medical costs for everyone. Meaning it is bad for ATTORNEYS.
Almost ALL politicians are attorneys. Very few are businessmen or entrepreneurs like Trump. They make money by suing people like Trump. So, they do not like anything that possibly limits how much money an attorney can make.
Money NOT collected by government as taxes does not disappear from the Earth.
It is spent by the taxpayer on goods and services and a little is put into savings accounts in banks and other investments.
Money is the ‘fuel’ of the economy, the lubricant of the wheels of progress.
When it circulates via economic freedom, people get jobs providing those goods and services and the population flourishes.
When government gets it instead, it is squandered on needless bureaucracy, graft and waste, doing nobody any good....................
The Federal tax system is the way the government gets its power.
The power to tax is the power to destroy.
They will not give up that power.................
I think most of my comment breezed past you. No IRS, no DOE maybe minimal Dept of Ed., Tariffs, strengthened industrial sector etc.
Not looking to fund the Gv’t on Tesla or big mac sales. It’s a gestalt with lowered spending, tariffs, small VAT, increased industrial base.
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