{"id":14696,"date":"2024-09-12T11:53:56","date_gmt":"2024-09-12T11:53:56","guid":{"rendered":"https:\/\/lonecandle.com\/?p=14696"},"modified":"2024-09-12T11:53:56","modified_gmt":"2024-09-12T11:53:56","slug":"trump-and-harris-agree-on-no-tax-on-tips-theyre-both-wrong","status":"publish","type":"post","link":"https:\/\/lonecandle.com\/?p=14696","title":{"rendered":"Trump and Harris agree on \u201cno tax on tips.\u201d They\u2019re both wrong."},"content":{"rendered":"\n

“The problem with tipped wages is not that they are taxed too heavily; it\u2019s how little they tend to pay, and how much tipped workers have to rely on the kindness of strangers to make ends meet. In 2023, for example, the median annual wage for waiters was just below $32,000, according to the Bureau of Labor Statistics<\/a>.<\/p>\n\n\n\n

In fact, as the Tax Policy Center put it<\/a>, eliminating income taxes on tips would do little, if anything, for many tipped workers whose earnings are so low that they are already exempt from paying federal income taxes.<\/p>\n\n\n\n

\u201cIt\u2019s very hard to dispute that the vast majority of moderate and low-wage workers are left out,\u201d said Brendan Duke, senior director of economic policy at the Center for American Progress. \u201cWe know that 95 percent of low- and moderate-wage workers<\/a> don\u2019t get tips, and only about a third of those tipped workers pay income taxes and would benefit from this.\u201d (Duke was specifically talking about Texas Senator Ted Cruz\u2019s proposed legislation<\/a> on this issue.)<\/p>\n\n\n\n

Part of the reason that tipped workers are paid so poorly is that the federal government only guarantees them a subminimum wage of $2.13 per hour<\/a>. If along with tips, a worker\u2019s earnings are still below the federal minimum wage of $7.25 per hour, then employers have to make up the difference. (Many states and municipalities have wage requirements above the federal minimum, but those also often include carve-outs<\/a> with lower hourly minimums for tipped workers.)<\/p>\n\n\n\n

That\u2019s why a handful of states have abolished the subminimum wage<\/a> for tipped workers altogether. Because by allowing employers to pay tipped workers less, businesses essentially pass their payroll burden directly onto their customers. And while most Americans are used to paying tips, those who don\u2019t \u2014 or those who at least threaten to not tip \u2014 create a hostile environment for workers and make it harder for employees to make a fair wage.”<\/p>\n\n\n\n

…<\/p>\n\n\n\n

“One of the biggest concerns about doing away with federal taxes on tips is that it would discourage businesses from offering more competitive wages. That\u2019s because if workers\u2019 take-home pay increases because of a tax cut, employers wouldn\u2019t need to provide tipped workers a higher base-line wage. In effect, it\u2019s a tax cut that might mostly subsidize businesses\u2019 payroll costs, not workers\u2019 cost of living.<\/p>\n\n\n\n

\u201cIt will reduce employers\u2019 needs to raise wages,\u201d Shierholz, of the Economic Policy Institute, said.<\/p>\n\n\n\n

There\u2019s also the fact that creating a tax carveout for tipped employees could create a major loophole for employers looking to pay people less. Some sectors, for example, can simply become part of the tipped economy, making more of their workers rely on tips rather than a minimum wage.<\/p>\n\n\n\n

The policy would \u201cincentivize employers to have more workers be in tipped occupations,\u201d Shierholz said. \u201c[Employers] could reduce the base wages they pay their workers under the guise of doing something for the workers. They could say, \u2018We\u2019re making you tipped because you won\u2019t have to pay taxes\u2019 and then in the fine print, it\u2019s like, \u2018Oh also, you\u2019re going to be making $2.13 an hour in base wages.\u2019\u201d<\/p>\n\n\n\n

That\u2019s why pursuing other policies, like abolishing the subminimum wage, would do much more to increase workers\u2019 pay than eliminating taxes on tips would. The poverty rate for tipped workers in states without a subminimum wage, for example, is lower than that in states<\/a> with a subminimum wage.<\/p>\n\n\n\n

\u201cIf you really want to help tipped workers, there are other ways that are far, far better,\u201d Shierholz said, adding that federal dollars would be better directed toward programs like the Child Tax Credit or the Earned Income Tax Credit, which would be much better at targeting workers who need it.<\/p>\n\n\n\n

So if politicians are looking to tout a pro-worker agenda, they should point to policies that can actually raise people\u2019s wages, as Harris did by also endorsing raising the minimum wage. Otherwise, they might just be pushing for yet another tax cut for the rich. After all, that might be why major business lobbying groups<\/a> have endorsed \u201cno tax on tips\u201d \u2014 to avoid actually raising workers\u2019 wages.”<\/p>\n\n\n\n

https:\/\/www.vox.com\/policy\/366680\/no-tax-on-tips-trump-harris-subminimum-wage<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

“The problem with tipped wages is not that they are taxed too heavily; it\u2019s how little they tend to pay, and how much tipped workers have to rely on the kindness of strangers to make ends meet. In 2023, for example, the median annual wage for waiters was just below $32,000, according to the Bureau of Labor Statistics.
\nIn fact, as the Tax Policy Center put it, eliminating income taxes on tips would do little, if anything, for many tipped workers whose earnings are so low that they are already exempt from paying federal income taxes.<\/p>\n

\u201cIt\u2019s very hard to dispute that the vast majority of moderate and low-wage workers are left out,\u201d said Brendan Duke, senior director of economic policy at the Center for American Progress. \u201cWe know that 95 percent of low- and moderate-wage workers don\u2019t get tips, and only about a third of those tipped workers pay income taxes and would benefit from this.\u201d (Duke was specifically talking about Texas Senator Ted Cruz\u2019s proposed legislation on this issue.)<\/p>\n

Part of the reason that tipped workers are paid so poorly is that the federal government only guarantees them a subminimum wage of $2.13 per hour. If along with tips, a worker\u2019s earnings are still below the federal minimum wage of $7.25 per hour, then employers have to make up the difference. (Many states and municipalities have wage requirements above the federal minimum, but those also often include carve-outs with lower hourly minimums for tipped workers.)<\/p>\n

That\u2019s why a handful of states have abolished the subminimum wage for tipped workers altogether. Because by allowing employers to pay tipped workers less, businesses essentially pass their payroll burden directly onto their customers. And while most Americans are used to paying tips, those who don\u2019t \u2014 or those who at least threaten to not tip \u2014 create a hostile environment for workers and make it harder for employees to make a fair wage.”<\/p>\n

…<\/p>\n

“One of the biggest concerns about doing away with federal taxes on tips is that it would discourage businesses from offering more competitive wages. That\u2019s because if workers\u2019 take-home pay increases because of a tax cut, employers wouldn\u2019t need to provide tipped workers a higher base-line wage. In effect, it\u2019s a tax cut that might mostly subsidize businesses\u2019 payroll costs, not workers\u2019 cost of living.<\/p>\n

\u201cIt will reduce employers\u2019 needs to raise wages,\u201d Shierholz, of the Economic Policy Institute, said.<\/p>\n

There\u2019s also the fact that creating a tax carveout for tipped employees could create a major loophole for employers looking to pay people less. Some sectors, for example, can simply become part of the tipped economy, making more of their workers rely on tips rather than a minimum wage.<\/p>\n

The policy would \u201cincentivize employers to have more workers be in tipped occupations,\u201d Shierholz said. \u201c[Employers] could reduce the base wages they pay their workers under the guise of doing something for the workers. They could say, \u2018We\u2019re making you tipped because you won\u2019t have to pay taxes\u2019 and then in the fine print, it\u2019s like, \u2018Oh also, you\u2019re going to be making $2.13 an hour in base wages.\u2019\u201d<\/p>\n

That\u2019s why pursuing other policies, like abolishing the subminimum wage, would do much more to increase workers\u2019 pay than eliminating taxes on tips would. The poverty rate for tipped workers in states without a subminimum wage, for example, is lower than that in states with a subminimum wage.<\/p>\n

\u201cIf you really want to help tipped workers, there are other ways that are far, far better,\u201d Shierholz said, adding that federal dollars would be better directed toward programs like the Child Tax Credit or the Earned Income Tax Credit, which would be much better at targeting workers who need it.<\/p>\n

So if politicians are looking to tout a pro-worker agenda, they should point to policies that can actually raise people\u2019s wages, as Harris did by also endorsing raising the minimum wage. Otherwise, they might just be pushing for yet another tax cut for the rich. After all, that might be why major business lobbying groups have endorsed \u201cno tax on tips\u201d \u2014 to avoid actually raising workers\u2019 wages.”<\/p>\n

https:\/\/www.vox.com\/policy\/366680\/no-tax-on-tips-trump-harris-subminimum-wage<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[13],"tags":[221,966,140,1025,170],"class_list":["post-14696","post","type-post","status-publish","format-standard","hentry","category-article-share","tag-donald-trump","tag-kamala-harris","tag-tax","tag-tax-code","tag-trump"],"_links":{"self":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/14696","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14696"}],"version-history":[{"count":1,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/14696\/revisions"}],"predecessor-version":[{"id":14697,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/14696\/revisions\/14697"}],"wp:attachment":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14696"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14696"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14696"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}