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.”
“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.”
Many states run investment systems to pay government pensions.
People might be allowed to provide for their retirement via their state pension investment system.
you a correct
In some areas, the employer just reports a fixed percentage of all bills as the tip income and withholds for tax purposes based on that. Actual taxes are bases on the actual tip amounts, and those with jobs where tips are expected are (legally) expected to report the actual tip income.
I figure that the people making the biggest stink about this have never had to work for tips in their lives. Maybe never actually worked in their lives.
No income should be taxed. Trump is doing away with the income tax soon so promising no tax on tips is easy.
Chips Ahoy and the rest can go fly a kite
Influential? But the goons and thugs of NBC 'news' won't say who they are? Gimme a break.
NBC's a bunch of Trump haters... and any 'influential republicans' they speak of are only 'influential' with NBC and MSNBC.
If these fake 'journalists' can't get their fakes to go on the record they should skip the story. Do we really care what the hell George Conway thinks about any thing?
NBC - worse than CNN.
Correct. They have no clue as to how the real world works.
They believe that the pie is only so big, so that if you cut one slice out the other slices are then deprived by that same amount. Not that the pie will actually get bigger.........
I second that!
Tip=Gratuity or Gift (unless it reaches the taxable threshold- only to satisfy the leftists)
Pay the staff minimum wage. Doesn’t the establishment have to pay payroll taxes on the tips too?
revenue - can be increased by reindustrialization
spending - welfare need can be increased by getting rid of overtime laws (which are obsolete since most employers refuse to pay time & half) and the PPACA hour-based employment barrier
The reason they call tax cuts “costs” is that they truly believe 100% of everything belongs to the government. They merely let people keep some of their money at a “cost” of course.
Trump understands the multiplier effect of cash. The money will eventually be taxed a hundred times.
You quoted no numbers. That constitutes a hand wave.
“IT WENT TOO FAR.”
Fighting for middle class income and real property tax caps now in Congress would add the electors of several deep blue states to Trump’s total and make Congress turn deep red come November, with the middle class being defined as persons having income in the range of federal civil servants.
“You quoted no numbers. That constitutes a hand wave.”
We wave goodbye to money every payday and millions of spring days.
We need to do what we can when we can.
Reindustrialization and increasing household income are good things in and of themselves.
Read my profile page for other suggestions.
In life, if you work smart and hard you usually wind up doing both good and well.
Jeff, those numbers seem awfully large.
One of the reasons I leave cash tips
Gifts, according to the IRS are not taxable unless they exceed $18,000. So if I give a waiter tips of under $18,000 for 2024, gift and not taxable.
But this simple concept seems to drive democrats barking mad.
The IRS assumes that on every meal you serve you get a 15% tip and that is calculated in to the taxes you must pay. Or you must prove you did not get such tips. The IRS is bloody insane.
Except for those restaurants which automatically add an involuntary "tip" to the bill.
US feral government spending is completely uncoupled from tax revenue, so why collect taxes at all?
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