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“No tax on tips” is an industry plant

newyorker.com

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Re: “No tax on tips” is an industry plant

#61

Post by the_snooze »

atmavatar wrote: post #45
jrockway wrote: post #35

Earlier quoted context omitted.

Yeah, there is a lot of shadiness going on these days. I don't think tips should be requested in any sort of transaction where the employee gets paid more than minimum wage. Restaurants always had this weird system where you could avoid paying your employees if they were tipped, so it was drilled into everyone's head "you're stealing from poor innocent workers if you don't tip 20%". But this is not the case for most…

Peak tip cynicism is when you're at an upscale restaurant where the wait staff are obviously being paid more than minimum wage, the bill automatically includes a gratuity (often 18% or more), and then on top of that, there's a line to include another tip.

Any fee or surcharge beyond the listed menu prices and associated taxes are a tip as far as I'm concerned.

If the restaurant is going to be shady and unilaterally introduce confusion to an already confusing norm, then I consider that norm voided and fair game for any interpretation.

Re: “No tax on tips” is an industry plant

#62

Post by throw678937 »

limagnolia wrote: post #31
littlexsparkee wrote: post #3

Some interesting points: ~40% of tipped workers don't make enough to get taxed anyway, no tax on tips would actually advantage better paid workers like casino dealers who don't need the help. NToT is described as a campaign to distract from minimum wage increase initiatives.

They may not pay any income taxes, but they almost certainly pay FICA taxes. If the NToT includes FICA, they would be better off. However, I still think it is terrible idea to advantage some employment classes and means of compensation over others like that.

[dead]

Re: “No tax on tips” is an industry plant

#63

Post by littlexsparkee »

garciasn wrote: post #7
bigyabai wrote: post #2

It's also a joke, because anyone who's worked a service job knows there is no tax on cash tips (wink!)

I have an honest question: what's the cash vs card tip ratio? 99.999% of the time I am not carrying cash and I don't see many (any?) people paying with cash ANYWHERE in the last 10+ years.

in SF I only carry cash for dive bars and the occasional mom n pop diner

Re: “No tax on tips” is an industry plant

#64

Post by wakawaka28 »

aaplok wrote: post #60
chriscrisby wrote: post #10

Earlier quoted context omitted.

That’s a weird way to say a sizable majority of tipped workers do pay taxes and will benefit from this.

Beware the logical fallacy. "A implies B" does not mean that "not A implies not B". Workers who earn too little to pay taxes (A) will not benefit from a tax cut (B). But workers who earn enough (not A) may still not benefit (not B), for example because their employer indirectly pockets the difference. That is actually being argued in the article. So this is indeed the appropriate way of formulating the statement: at…

I can't read this article because of the paywall. Are they saying that taxable tips are subject to payroll taxes (which employers pay out of pocket)? That would actually benefit both employers and employees in some sense.

Some tipped workers, like bartenders, can make more in tips than a junior software engineer lol. Less taxes definitely helps their cause.

If you are concerned with indirect effects, there's quite a few pros and cons that you could extrapolate from the no tax on tips policy. These arguments are far less compelling in general.

Re: “No tax on tips” is an industry plant

#65

Post by wakawaka28 »

Aloisius wrote: post #21
toomuchtodo wrote: post #9

Earlier quoted context omitted.

https://jacobin.com/2025/07/restaurant-industry-tipped-submi... https://jacobin.com/2020/10/tipped-restaurant-workers-waiter... https://cepr.net/publications/customer-tips-are-providing-th...

I live in California and this isn't true here. All restaurant workers receive at least minimum wage before tips. In my city, that's $19/hour with health insurance. Of course, you're still expected to leave a tip and suggested minimum is now 20%, plus even McDonalds is charging $15 for a 4 oz burger, so I rarely go out to eat at places that expect a tip anymore. I'm not sure why they specifically should be tax exempt…

>Of course, you're still expected to leave a tip and suggested minimum is now 20%, plus even McDonalds is charging $15 for a 4 oz burger, so I rarely go out to eat at places that expect a tip anymore.

Don't tip, especially 20%, for over the counter service. That is ridiculous.

>I'm not sure why they specifically should be tax exempt though. Cash tips often were, practically speaking, so a lot of tax evasion was happening, but it still seems odd to single them out.

It's just a gimmick to get votes. The theory is that poor people tend to be the ones that work these jobs, they need a break, and it's not a policy that would cost very much anyway. There is a cap on the tips and most cash tips were going unreported anyway.

Re: “No tax on tips” is an industry plant

#67

Post by atomicnumber3 »

hirvi74 wrote: post #56
limagnolia wrote: post #34

Earlier quoted context omitted.

This is unlikely to be allowed, the last I checked, the law explicitly only allows "traditionally tipped jobs". How it gets interpreted and implemented in IRS Tax Code isn't clear yet, but they will probably have rules in place to prevent this. Doesn't change the fact that it is a terrible idea.

Hmm, this makes me wonder though -- I have noticed various projects on Github and various other sites allow for users and fans of projects to donate to the developers and maintainers. Who hasn't seen the "wanna buy me a coffee?" button on a site before? I am not sure if the money from such sources was ever taxed as income, but if so, then I wonder if such will be non-taxable now? Considering donation and tip buttons…

Technically that money should be reported on a 1099 misc. but is it generally enough to even have an auditor look at it? I'd guess not. But you do technically need to.

Re: “No tax on tips” is an industry plant

#68

Post by itake »

wakawaka28 wrote: post #64
aaplok wrote: post #60

Earlier quoted context omitted.

Beware the logical fallacy. "A implies B" does not mean that "not A implies not B". Workers who earn too little to pay taxes (A) will not benefit from a tax cut (B). But workers who earn enough (not A) may still not benefit (not B), for example because their employer indirectly pockets the difference. That is actually being argued in the article. So this is indeed the appropriate way of formulating the statement: at…

I can't read this article because of the paywall. Are they saying that taxable tips are subject to payroll taxes (which employers pay out of pocket)? That would actually benefit both employers and employees in some sense. Some tipped workers, like bartenders, can make more in tips than a junior software engineer lol. Less taxes definitely helps their cause. If you are concerned with indirect effects, there's quite a…

https://archive.is/20250731232051/https://www.newyorker.com/...

> Some tipped workers, like bartenders, can make more in tips than a junior software engineer lol. Less taxes definitely helps their cause.

neat, but you can only deduct up to $25k and the benefits phase out if you earn more than $150k (single filers).

Re: “No tax on tips” is an industry plant

#69

Post by evo_9 »

According to my accountant for my wife’s small business (nail and wax salon) this tax law change will have a significant positive impact on her staff. Not sure what to make of this article, it seems pretty disingenuous.

Re: “No tax on tips” is an industry plant

#70

Post by Bukhmanizer »

siliconc0w wrote: post #25

"No tax of tips" is one of the most brilliant political ploys ever. You really gotta give Trump credit. It doesn't really cost anything, businesses love it, and you can trot it out as a victory for the working class while you screw them on their health care or energy costs.

It’s not really, it’s the kind of thing that only a populist could do. If a Democrat did this, people would hate it for this very reason. This would just another “NeoLib” concoction to screw the working class.
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