Harris says she supports eliminating federal taxes on tips

[BumRushDaShow]

Source: NBC News

Aug. 11, 2024, 9:25 AM EDT / Updated Aug. 11, 2024, 10:11 AM EDT


Vice President Kamala Harris on Saturday pledged to eliminate taxes on tipped wages for service workers, matching a proposal from former President Donald Trump.

During a rally in Las Vegas she held alongside her running mate, Minnesota Gov. Tim Walz, Harris praised the work of the Culinary Workers Union, which endorsed her on Friday, and vowed to continue to support policies that would benefit the union’s workers.

“When I am president, we will continue our fight for working families of America, including to raise the minimum wage, and eliminate taxes on tips for service and hospitality workers,” Harris said.

Following up on her comments at the Las Vegas rally, a Harris campaign official clarified that her push for the elimination of taxes on tips would require legislation. If elected president, Harris would work with Congress to craft a proposal that mandates an income limit and applies strict requirements to prevent hedge fund managers and lawyers from structuring their compensation to take advantage of the policy. Harris would push the proposal with an increase in the minimum wage as well, the official said.

Read more: https://www.nbcnews.com/politics/2024-election/harris-supports-eliminating-federal-taxes-tips-rcna166124

[BlueTsunami2018]

1. Not sure why stealing this idea from Piss Wig is a good thing.

Tips are income. Income is taxed. Why specifically would/should this income be tax exempt?

I’d much rather see some legislation that eliminates the need to depend on tips for income. Like a living wage law or something.

[Bengus81]

3. Because she would actually implement it. Trump is just pandering for voters

Just like his "coming any day" middle class tax cut, infrastructure plan and of course his new and biggly improved ACA we've been waiting on for eight years just to see the details.

[BumRushDaShow]

5. THIS 👆👆👆

[Puppyjive]

8. It will affect their social security

Last edited Sun Aug 11, 2024, 11:23 PM - Edit history (1)

Tipped workers have some of the lowest social security retirement. This should be concerning to them.

[pat_k]

28. Eliminating the need to report doesn't make

... sense to me. I could see something like this making more sense:

https://www.democraticunderground.com/100219319975#post11

[RicROC]

12. Tips are gifts given by the patrons and should not be taxed,

and their hourly wages should also be increased.

[JohnSJ]

26. I agree. It is obviously to cater to the culinary union she was hoping

to get their votes in Las Vegas

I don’t think she would have brought it up if trump didn’t

I don’t think it will hurt, but I am disappointed that she is playing this political game.

[imax2268]

37. Technically...

Trump stole it from Ron Paul. He came up with legislation for it back in 2007 and advocated for it for several years after.

https://www.huffpost.com/entry/trump-no-taxes-on-tips-copycat-kamala-harris_n_66b847f8e4b084249ca1b299

[The Grand Illuminist]

2. I don't want my money back, I want my money's worth.

Better roads, a good infrastructure, high quality public education.

[Maeve]

4. Raise the minimum wage and eliminate tips

We have tipping in part because we don't pay service workers properly. Fix that and tipping goes down to appreciation, not wage-suppliment.

[JohnSJ]

27. Yes, that is the solution.

[Silent Type]

30. I know some waiters who make more in tips than they could make in any other job they are interested

in or qualified. Point is, I’m not sure service industry wants tips eliminated/discouraged. But, just speculation.

[marble falls]

36. Screw that. I made over $50k a year by the time I stopped waiting tables, in the nineties I averaged over $25/hour ...

... and I never, ever lied on my taxes. My hourly wage was $2.14 an hour. How about just keeping other none service workers like hosts/kitchen/managers out of my wages?

?si=HaoBWrJu9shOogdS

[The Mouth]

6. And Social Security, too, would be good

[twodogsbarking]

7. Let's just replace the entire cluster fuck tax system we have.

I worked with it for more than forty years. That is all.

[NGeorgian]

9. Are the girls at the "Gentlemans Club" hospitality workers?

Asking for a friend,

[Clouds Passing]

10. When I first started waiting tables, late 70s, there were no taxes on tips. Taxing of tips started in the early 80s.

Possibly because of ERTA 1981(that cut taxes for the rich and increased taxes on the rest of us) All I can find is articles praising this awful tax decrease for the rich, none that show the increases on the masses, particularly the initiation of taxes on tips. If anybody knows this, I would appreciate if you posted it.

The tax was calculated on 8% of my total sales for the day. Most likely the taxes on tips are higher than 8% now.

Found it 1982

https://www.upi.com/Archives/1983/02/05/New-Internal-Revenue-Service-rules-for-reporting-tips-have/9750413269200/

[BumRushDaShow]

13. That 1982 mess

H.R.4242 - Economic Recovery Tax Act of 1981

also took the top tax bracket from 70% to 50% and the bottom from 11% to 14%. Those were adjusted with later bills, where the top dropped further to 38.5% and was originally intended to end up at 25% (but was then kicked up to 28% with an '86 update). The '93 one took the top marginal back UP (to 39.6%) and that is where it stayed until the latest 2017 law, where it is 37% (but lower brackets were also finally restored).

The top marginal rate needs to go BACK to 70% but trying to do that now is near impossible.

[Clouds Passing]

14. Page S.ix in the summary validates hurting the lower half while helping the upper bracket

https://www.cbo.gov/sites/default/files/99th-congress-1985-1986/reports/doc20a-entire.pdf

I couldn’t get the top two paragraphs to copy only the entire document. Technologically impaired.

[BumRushDaShow]

15. The Summary

SUMMARY

JLn the Economic Recovery Tax Act of 1981 (ERTA), the Congress lowered
the top marginal tax rate on individual income from 70 to 50 percent, reduced
other marginal tax rates by 23 percent over a three-year period, and enacted a
number of other provisions that reduced individual tax payments and lowered
taxes on the business income of both individuals and corporations. The cor-
porate tax reductions in ERTA were partially offset later by the provisions of
the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA).

ERTA also provided for indexation of personal exemptions, the zero brack-
et amount (ZBA), and the width of tax brackets to changes in the Consumer
Price Index beginning in 1985. Because indexing did not take effect immediate-
ly, however, the real value of personal exemptions, the ZBA, and bracket widths
continued to decline between 1980 and 1984.

This paper examines the effects of ERTA and TEFRA on changes in the
distributions of individual income tax payments and after-tax incomes between
1980 and 1983. The total change in the distribution of tax payments is separated
into a "static" component attributable only to the tax changes, and a component
labelled "feedback and other" that is attributable to changes in the distribution
of pretax income. The latter changes reflect effects of the tax changes on the
percentage of income received in taxable forms in different income classes, and
the effects of changes in economic conditions. Particular attention is directed
toward behavioral responses, especially those for taxpayers in the upper 1 per-
cent of the income distribution.

[Clouds Passing]

17. Thank you.

[BumRushDaShow]

19. Most welcome!

And thank you for digging that up!

[moose65]

24. Actually....

The top rate of 39.6% that Clinton signed into law in 1993 was lowered during the George W years, when we had another round of tax cuts. It went back up to 39.6% during the Obama years before being cut again by Trump.

[BumRushDaShow]

32. Yes

https://www.politico.com/story/2016/06/president-bush-signs-tax-cut-into-law-june-7-2001-223868

And that was after he was handed a budget surplus from Clinton, and promptly squandered it!

[moose65]

38. Yep!!

I can remember at the end of Clinton’s presidency when the CBO was projecting budget surpluses far into the future. There was even a chance to pay off the national debt in 10 years! And now, look where we are 😡

[BumRushDaShow]

39. And I was still a federal an employee back then

and in 1994, the Federal Employee Pay Comparability Act finally went into effect, but during that period leading up to Shrub, we ran into this -

(snip)

Employee representatives are frustrated because the President's raise figures, like previous proposals for annual increases, do not follow the formula for gradually closing the gap between federal and nonfederal pay laid out in FEPCA.

Clinton has avoided the FEPCA requirements each year by citing a section in the law that allows the President to waive the higher increases during times of "severe economic conditions." No definition of such conditions was included in the FEPCA legislation.

Federal workers would need a 13 percent pay average increase in 1999 to comply with FEPCA.

(snip)

https://www.govexec.com/federal-news/1998/08/clinton-approves-36-percent-pay-raise/4047/

which I expect helped with the "surplus" but also kept the pay gap in place and to date, getting worse.

[Farmer-Rick]

16. Thank Reagan

He raised the middle class's taxes all across the board from doubling Social Security taxes to starting reporting and taxing smaller tips.

[Clouds Passing]

18. Jack Kemp and William Roth (Rs) also

[sl8]

20. Maybe the TEFRA act of 1982?

It specifically addressed tip reporting.

https://www.investopedia.com/terms/t/tefra.asp

[Clouds Passing]

21. Thank you.

I believe you are correct!

[Marthe48]

11. I worked as a cook in a couple places

Mom and Pop restaurants in different towns here in Appalachia. The cooks were paid more. I was working at a place in 1990. The manager had a meeting with the kitchen and wait staffs that the restaurant was going to enforce withholding on tips which would be estimated to be 15%. Based on average tips given at the time. We all knew that some people tipped, some didn't tip 15% and lots of people didn't tip at all. It didn't affect my withholding, but I thought it was unfair to tax money the waitresses weren't getting. I think that at the end of the year, the waitresses would have to claim 8% of the 15% withheld as income and could try to get the rest back in a refund.

I saw some comments about social security being affected, and I wonder if the waitresses got credit for social security at 15% or 8%?

[Greybnk48]

22. I read this was a scam by Trump so Hedge funders could call their fees "tips" and evade

paying taxes, and that it would not really help the service industry that much. Just another scam?

She's smarter than I am and surely knows this, if true.

[BumRushDaShow]

23. I was under the understanding that

hedge fund managers received no salary but got "paid" a percentage of the fund itself (i.e., % of profits?) based on how they "managed" it... Thus I think that is why they were only taxed at the "capital gains" rate vs any of the wages/salary rates.

[jmowreader]

31. They call it "commission"

A lot of salespeople are paid strictly on commission.

[BumRushDaShow]

34. That's the term

Couldn't remember it!

[NowsTheTime]

25. It looks like the Federal Minimum wage is what needs to be raised to affect many states...

.....I'm guessing the filibuster has prevented it from being raised?

https://fred.stlouisfed.org/release/tables?eid=243906&rid=387

[Groundhawg]

29. I don't like her doing the same as tfg.

[Frizzy5]

33. Why not?

[Groundhawg]

35. Because tfg is doing it to buy votes.