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“No tax on tips” is an industry plant

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

#371

Post by xp84 »

vladvasiliu wrote: post #330
gmadsen wrote: post #324

Earlier quoted context omitted.

It is a mechanism to move labor costs to the consumer. On some delivery apps , the driver can decide which jobs to take based on the pre-service tip. So the companies have effectively put the responsibility to pay driver's base wage on the users themselves, while the company still takes a huge corporate cut

> It is a mechanism to move labor costs to the consumer. How does this work? The corp already handles some form of payment to the worker, especially when you tip as part of a card payment. And in both cases, the consumer foots the bill. How's it different from paying the worker more and asking for more money upfront?

The gready sleazeballs who like the "tipping" system (mostly, restaurant owners) would prefer to pay all their employees $0 and have all diners/customers/etc pay 100% of the wages out of guilt.

While 10% was customary in the first half of the 20th century, the standard tip gradually increased to 15% by the 1980s.

In 2025 it's not uncommon to see little shortcut buttons for 20, 25, 30%. You can see where this is going. They want us to tip 50% and they pay $0, even though restaurant menu prices are one of the things that has experienced more inflation than other things.

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

#372

Post by gchamonlive »

Tips are the most cynical thing I've ever seen.

Tips are supposed to be "in return for a service, beyond the compensation agreed on" (WordsAPI).

If tips instead mean "it's something you have to give when you had no problems with the service provided", and you expect routinely not to have problems with such service providers, then it's implicitly agreed that tips are required, so they are not tips anymore.

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

#373

Post by aidenn0 »

xp84 wrote: post #365
thfuran wrote: post #362

Earlier quoted context omitted.

It's $2.13 for tipped employees.

Not in all states. California does not have a lower tipped minimum wage. It's at least $16 here last I checked (except $20 for fast food because "reasons")

Ah yes; for a bit my wife was making less as a preschool teacher than the minimum wage at McDonalds. I understand it caused a bit of turnover at the local public schools, since cafeteria workers and aides were making less than $20/hr in 2024 as well (I don't know if they still are).

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

#374

Post by pc86 »

voidUpdate wrote: post #301
logifail wrote: post #273

Earlier quoted context omitted.

> when you are given the option to give a tip before any service has been given [...] why would I give a reward for good service Are there still customers giving tips as "a reward for good service"? I'm trying to imagine a curve representing the distribution of "quality of service". What shape is the curve, and where on it would a 20% tip and a 0% tip be?

I live in the UK, and I personally have never given a tip, I don't think I've even seen it as an option other than physically giving the other person some cash, but AFAIK its generally seen as something you do if the service was excellent, but as I say I've never done it myself. I'm not generally in situations where it could be warranted, like I don't really eat out much or anything like that

You've never had excellent service for something?

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

#375

Post by 9rx »

hdgvhicv wrote: post #109
9rx wrote: post #83

Earlier quoted context omitted.

> Tips subsidize profits, plain and simple. Nah. Profitability for the business would be higher without tips. I take x% of gross income as profit. No tips means I can charge the customer more, which means a higher gross income, which means more profit. When tipping is involved, the money slips through without allowing the business to take its cut. Good for the server, but not good for the business. However, as theore…

Why do you take a fixed profit. Why don’t you charge the amount which maximises profit?

Because x% is the maximum profit. Not even places like Walmart, for all their might, have figured out how to exceed the same x% (somewhere around 2-3%).

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

#376

Post by aprilthird2021 »

evo_9 wrote: post #69

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.

I'm just planning on tipping less to make up for it. In California minimum wages are already $20/hr, and on top of that so many places expect a higher %ge, tip, just cutting my tip by the 10% they pay in tax and being done with it. I pay taxes on my wages. They should too

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

#377

Post by pc86 »

oellegaard wrote: post #71

It’s crazy that this still happens in the US. Tipping is a thing of the past. Pay for your meal and have the restaurant pay their people for their work. End of story.

What's crazy is that you can so confidently claim "tipping is a thing of the past" when it's... not? You can think tipping should go away, that's a completely valid viewpoint. But your statement is just objectively wrong.

I see this a lot (not specific to HN) - some person doesn't like $THING, so they just declare that that thing is bad, or "a thing of the past," or whatever.

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

#378

Post by genericuser256 »

bobwell wrote: post #239

For example, Amazon caught lowering delivery driver pay with the tips making up the difference and then lying about it: https://www.ftc.gov/system/files/documents/cases/amazon_flex... > At the outset of the Amazon Flex program, from 2015 through late 2016, Amazon paid drivers at least $18 per hour plus 100% of customer tips > Beginning in late 2016 ... Amazon secretly reduced its own contribution to drivers’ pay to a…

In this case[0] the CEO (Chris Kirchner) stole ~20M$ from the company causing employees to go unpaid for months, and outside of California all they got was owed wages (no interest or anything). While mentioned in the article, what he was mainly convicted of was defrauding investors rather than stealing from employees.

> Apparently, projecting personal prosperity was more important to him than making payroll

He actually had the temerity early on in the debacle when he was still pretending there was money to tell us that they had decided to not pay us that week because it would be bad for the companies investments to withdraw funds then.

[0] https://www.justice.gov/usao-ndtx/pr/slync-founder-sentenced...

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

#379

Post by Aunche »

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…

It's actually even worse than that. The $19/hr and health insurance comes from increasing menu prices, so with flat percentage tips, you're paying more purely for the privilege of paying more.

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

#380

Post by xp84 »

kelnos wrote: post #192
KennyBlanken wrote: post #118

Earlier quoted context omitted.

No, it's spreading because corporations are waking up to what an insanely good deal "pay my employees for me" is. In my state an employer is only responsible for raising an employee's effective wage (for the entire pay period) to minimum wage if the tips don't. You can tip someone working as a waiter $100 and unless they've already hit minimum wage for that pay period, all you're doing is handing $100 to the owner be…

In California we've set the tipped minimum wage to the same as the non-tipped minimum wage (so employers have to pay their employees the same regular minimum wage regardless of whether or not it's a tipped job). Unfortunately, that hasn't fixed the tipping problem. Of course, a living wage in California is quite a bit higher then even our above-average minimum wage, so that's a big part of it.

I'd argue that (our socially-obligatory form of) tipping is a deceptive pricing practice (not really any better than a store labeling shelves with a giant $4 and a .99 written so small you need a magnifying glass to perceive it). As such, if banning it is too impractical, they should disincentivize it with the tax system. I can't figure out the best way, but it's disappointing that our government is obviously not trying to.

Note: I don't care one bit if someone wants to recognize an exceptional act by handing $20 to a worker -- that's great. That's not the same as giving a bartender $4 for spending 12 seconds pouring vodka and redbull into a glass or tipping $3 when I stood in line to order at a counter and came to fetch my food when my number is called.

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