Biden should adopt Trumps tax break on tips

[YorkRd]

Biden should adopt Trumps tax break on tips. Say even a blind hog stumbles across a good idea from time to time. Dems should tweak it and make it even more appealing to service workers. Also how do we pay for it? Base the whole package on taxing billionaires

[snowybirdie]

1. And please

remind what this is. Thank you

[WarGamer]

2. Billionaires will never pay their fair share

[Nevilledog]

3. The Culinary union knows Trump is lying. Why would Biden repeat a lie?

[Ms. Toad]

4. Why should one group of workers get tax-free income?

(Especially since this group of workers regularly fails to report tip income - so now most of the tip income is tax-free. That statement is based on years of experience as a tax preparer, when zero of my tipped employee customers reported anything beyond what was on the W-2.)

Formally making it tax-free (or lower tax) would make me even angrier than I am now at being coerced to pay tips as a result of a wage structure that shifts worker payments directly to customers - and leaves workers at the whim of customers for their basic income.

The sub-minimum wage for tipped employees needs to be terminated - and the cost of food increased to cover paying tipped employees a decent wage so all tipped employees get the same pay for the same work, and so all customers are paying the same amount for the same food. Tips, if any, should be truly voluntary - not coerced from those of us with a conscience to prop up the employer's failure to pay a decent wage to their employees.

[dsc]

5. The amount of the W2 is fairly high from my recollection

(8% of the value of food served if memory serves). I would imagine that takes much of the tip income they actually do get.

[calguy]

6. Not when many places automatically a 20% tip to the tab.

[dsc]

12. I think in those cases they have to report the 20% on the W2

[Ms. Toad]

8. I've also done my daughter's tax return -

Last edited Mon Jun 10, 2024, 08:35 PM - Edit history (1)

The amount reported on her W-2 by her employer wasn't even close to the actual tips she received working at Starbucks. (They have now changed to a system that tracks and reports all tips.) People are generally tipping about 15-20% - so that leaves7%-12% tax free for anyone reporting only what their employer reports.

And - employees are supposed to be reconciling their tips, reporting discrepancies to their employer, so that their employer reports an accurate amount on the tax return. But that is an added accounting burden on both employees and employers that I've never seen any employee do in real life.

Eliminating (or reducing) taxes for tipped employees just exascerbates the problem (and gives a tax break to tipped employees that it doesn't give to other workers with similarly low incomes).

Just treat tipped employees the same as every other worker earning a wage is treated - no more sub-minimum wage. That way workers aren't shorted if they are assigned the morning shift and don't earn 8% (and don't reconcile down their income - which would require their employer to pay more), other workers don't get a tax-free bonus (if they don't reconcile up their income), and customers pay an equal amount for equal food - and those of us with consciences aren't stuck "voluntarily" footing the bill for both those who don't tip and employers who don't pay a fair wage.

[dsc]

13. I definitely agree with you on the general concept of tipping being a problem

as a single person who often dines alone, I definitely am not fan of tipping. I generally have to frequent a restaurant to start getting good service since even when I tip a higher percent, the server can do better on virtually any table other than mine.

[Ms. Toad]

14. Interesting.

I barely pay attention to service when I'm in a restaurant (probably about half the time single, half the time with my spouse). As long as I get my food and it is hot/cold as it is intended to be, I'm happy. My spouse ALWAYS notices poor service - so it's bad nearly every time we go out. I'm just happily waiting for my food . . and she's asking how long it has been since we were seated/ordered/etc.

The only thing I might notice is that they never return to fill my coffee cup. I drink lots of coffee, and very few wait-staff are used to checking to refill the coffee cup - even in places that my spouse doesn't otherwise complain abot service.

(Same issue with doctor's offices - I always bring something to occupy my time, and don't particularly notice or care how close to the appointment they are (except the one doctor who has his lights on a motion sensor and they turn off on me after maybe 20 minutes) . . . my spouse starts threatening to leave when they are 5 minutes late.)

Guess I'm just weird. (But we tip 20% regardless of the quality of service . . . so the tip isn't serving its historical service anyway. Time to dump it.)

[orange jar]

7. Strongly agree.

Even Americans - who are known for our "tipping culture" - are starting to get sick of tipping, especially when some places basically corner you into tipping at a higher amount than one can afford (relative to the individual). A tax break like this would incentivize predatory tipping.

Also, there's the issue of companies that won't be compelled to provide better wages to their employees if tips can (somewhat) replace salary as income. Not to mention workers who don't have jobs that typically get tips… there are just too many negative outcomes to implement this, imo.

[Demsrule86]

10. Really, so you think not paying tips will raise wages...how generous you are to do them this favor...really

[orange jar]

17. That is not what I said.

I didn't say that refusing to tip would raise wages. I'm guessing you're referring to when I said "we're sick of tipping" - that doesn't mean that nobody should tip ever, it means that we're tired of being pressured into tipping as if it's mandatory to do so. Workers should absolutely be tipped if the customer chooses to do so. But many companies/employers use workers' tips as an excuse to not pay their employees a fair wage, which is what a non taxable income from tips would incentivize.

[Demsrule86]

9. I mean no offense, but my righty cousin at my daughter's wedding said what you posted. Waiters and other workers have

to report tips...as most are on credit cards these days. And furthermore, these folks get paid shit...below minimum wage. And even if you paid the minimum, do you think anyone can live off of that? If you can't afford a decent tip, perhaps home cooking would be a better option. It never fails to amaze me that some think others should be paid a pittance.

[Ms. Toad]

11. I said nothing about being paid a pittance; my focus is on fairness.

* As to the original question - fairness to other workers who get similar actual income but no tax break (either self-manufactured - or as proposed by Trump)
* Fairness across shifts - when I was in college the less favored servers were given the breakfast shift; the more favored got the dinner shift; the formal wage was identical, so guess who got more money?
* Fairness to customers - we pay 20% because we know that others don't tip at all, or tip almost nothing. Because we hate the tipping system - but are unwilling to take that out on tipped workers, we are subsidizing not only the employer (who gets away with paying almost nting) but also those who just don't care whether the person who served them gets paid a reasonable wage.
* Fairness to honest tipped workers. My daughter reported every penny of her tips (and was taxed on it). My sister does not (so she receives proportionately more to live on than my daughter.
* Fairness as to social security - tipped employees (and those working under the table at other jobs) who are not reporting their income are both contributing to the inability of social security to provide income in retirement - and contributing to the likelihood that the worker will need public assistance in retirement (because their SS retirement pay will be lower because it is based on reported income)

And, not fairness exactly, but many tipped employees are still coerced to putting on sexual display in order to earn enough to pay the bills, according to a friend I discussed this with recently.

Replacing the sub-minimum wage for tipped employees resolves all of this.
* All people with the same income as traditionally tipped employees will be taxed on the same amount
* Breakfast shift people will receive the same income as dinner shift people, since tips no longer play a rold
* I will be paying less for my meal, and the person who now doesn't tip will be paying more, since I will no longer be coerced into subsidizing the non-tipper (it's all included as part of the bill, as it should be)
* My daughter and my sister will both be taxed on their actual income, rather than my daughter subsidizing my sister
* The income to social security will increase, as more income is reported (and taxed), and my sister won't have to work until she dies (as she will now) because her SS income would be based on far less than she actually made.
* and since income isn't tied to sex appeal, my friend (and others similarly situated) can wear clothes designed to make her work easier - not to appeal to customers so they give her more money, and can return to the no-make-up look that is standard for her - except when she is using make-up to increase her tips.

[MichMan]

18. Were the tips declared accurately or not?

Earlier in another post you said that she under reported her tips when you prepared her tax return. Now you say she reported every penny.

I've also done my daughter's tax return -

The amount reported on her tax return wasn't even close to the actual tips she received working at Starbucks.

Fairness to honest tipped workers. My daughter reported every penny of her tips (and was taxed on it). My sister does not (so she receives proportionately more to live on than my daughter.

[Ms. Toad]

20. Sorry - typo.

The first quote should have said W-2. I'll fix it. She reported the full amount to the IRS on her tax return, a signficantly larger amount than her employer reported to the IRS on the W-2. (I was responding to someone who was suggesting that what employers report on the W-2 is close to what they actually receive.)

[YorkRd]

21. Working class voters think Dems hate them and this thread depresses me

Intellectually this idea has problems but it has huge emotional appeal and Republicans are exploiting it like hell. In a blue city I can’t even go into a working class bar without getting my feelings hurt.. We are right but they vote for Trump because he “cares” while we cater to elite college students. Republicans will give blue collar people this BS and use it as an excuse to give billionaires a tax cut for balance.

[TheRealNorth]

15. Sure, lets create a whole new avenue for tax evasion.....

[Ms. Toad]

16. It already exists.

This just makes it legal.

[ZonkerHarris]

19. Good luck getting working folks out from paying for the bills of billionaires. not happening