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.”
Balancing the trillion dollar (and ever growing) deficit by relying on taxing waitresses seems like a BS position to even say out loud.
They already have.
One of the things that is very different in Europe is that you do need to add a tip onto the bill at a restaurant. That is because your waiter is getting paid well to just deliver your food and do their job properly.
Unlike in the USA where waiters and waitresses get a lower minimum wage than any other person working in the USA.
The other thing about restaurants in Europe is that you have to ask for the bill. That dropping off the bill when you are done with your meal or desert is considered PUSHY.
“Any waiter or waitress dumb enough to declare a cash tip should pay taxes on it.”
As I recollect the federal government via the IRS presumes servers have a tip income of at least 8% of the cost of what they serve.
The government figures on 8%. That’s what you have to pay tax on. Anything over that is supposed to be declared as well of course.
I always pay tips in cash, even when paying the bill by card.
How do we know this analysis is phony? Well, it looks ahead about 500 years so as to amass such shocking numbers. In other words, it is all bullsqueeze.
I like your rationale. I'm going to adopt it.
I've always been a "tip in cash" guy because frankly, the FedGov & IRS behemoths have no business knowing what these people who bust their butts to provide good service, are making.
These are typically (not always...) students, people workign second jobs because they have to, older people who need additional income, etc.. I much prefer to tip in cash because it HELPS them.
Never thought of it as a "gift" ... now I will. Thank You!
Exactly. After he let Fauci destroy these people’s lives, Trump owes them big.
“taxing tips”
As I understand it, tips were considered income that legally had to be reported as income on a 1040.
The 8% presumption rule was in effect before I even heard of the name of Bill Clinton.
The middle class began paying federal income tax under FDR. I think FICA was first for Social Security and then the 1040 stuff in a really big way for WW2. After WW2, leftists in Great Britain and the United States decided to continue high middle class income taxes to fund the modern welfare state.
He means we have to pay Ukraine’s bills.
“I see voluntary tips as gifts, which should never be taxed.“
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I do too which is why I always tip in cash and pay the bill with a card. Having family members who work for tips I’m familiar with the games employers can play with “on-the-record” tips such as pooling and diverting substantial amounts to kitchen staff.
The biggest downside I see from Trump’s proposal would be IF the tip income would no longer be credited for Social Security purposes. In other words ideally exclude it from INCOME TAXATION while maintaining it under SOCIAL SECURITY CONTRIBUTION coverage.
That's a bingo.
(Is that how you say that? "That's a bingo"?)
Gifts should never count toward Social Security.
While the employee pays FICA and medicare tax on tips, a large part of tips are not subject to the employer portion of the FICA and Medicare tax.
Communists believe every dollar earned belongs to the gummit.
“I think most of my comment breezed past you.”
Half of America feeds at the federal trough.
The US would have to reverse 90 years of history and widespread economic and legal decline to get in a place where the tax system you want would be possible.
Reindustrialization of America is a good place to start.
Getting rid of overtime laws so people can work enough hours to comfortably pay bills is another.
Couple that thought to this:
Government workers do not pay taxes.
They just think they do..................
Not taking in taxes is not a “cost”. Your concern is noted by the Republic is not a few tip dollars away from solvency. I’d rather the tips stay with a waitress who is trying to make rent that Zelensky (which is where this ultimately will go)
For you folks who missed it, the CBO re-evaluated 2024’s fiscal deficit — upwards to $1.9T.
And for you folks who think the answer is lower spending, here you go:
https://en.wikipedia.org/wiki/United_States_federal_budget
Study it carefully and don’t just wave a hand and announce X can be cut and Y is fraud and Z is waste.
Revs $4.4T, Spending $6.3T — deficit $1.9T
Soc Sec and Medicare add to 2.1T spending. Medicaid adds another 0.6T (and before you rage on that, remember it pays 80-90% of elderly nursing home costs).
Interest, with a rate of 3.2% (and climbing as older debt matures and rolls over new instruments with higher rates), is now over $1T. People quote this wrong because they quote last year’s interest rate. It is rising because the Fed is at 5% and is going to stay there until inflation is 2%, which could be years — or never.
DoD 0.8T. Non defense discretionary is the only place you can go for cuts and it’s only 0.9T. This would be food inspection, the FAA, NASA, the VA, Law Enforcement, State.
You can say YEAH, CUT THAT, but all you will accomplish is a few hundred million here and there, and then go to GOP voters and point and say SEE? I CUT SPENDING. BS. You did nothing. You could cut all 0.9T and it would be nothing, with no further air traffic or VA services.
THERE IS NO SOLUTION. IT WENT TOO FAR. Nihilism is ascendant because math is ascendant.
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