Your best columns tend to be the "commie" ones. It's all about fairness and common sense, based on your own very catholic ethics and morals, not the christian nation-ism bullshit of Trump cranks and weirdos. Châpeau!
One thing I'm not seeing here that I wonder if a no tax on tips would facilitate is hiring undocumented workers. If a business doesn't pay someone, and their wage is 100% tips, couldn't that make it easier to employ undocumented workers? This is best handled as a local policy (state at the biggest). If this rolls out nationally, I look forward to negotiating my bonu.. ahem, yearly tip from my employer.
I own a restaurant in Savannah Georgia. We pay our servers the federal minimun of $2.13 an hour.
Our OK servers make $25 per hour and our best srvers make $35-$38 an hour. Almost never less then $30 per hour. Right now they pay tax on it all. If the Feds stop taxing tips the best servers will be earning $50-$55 per hour. I will get an even better quality employee. I can see all sorts of retail employees and office workers quitting their jobs to work for me. Also we take some of the servers tips and share them with the hosts and buspeople so good for them.
I also wonder about the servers who work in hoity-toity restaurants in Manhattan. These servers can make $150,000 dollars a year. How is that fair.
Not only would retail and office workers want to quit their low wage jobs to beome tipped employees, so would all wage earners from nursing home employees to truck drivers and everyone in between. This would lead to all kinds of labor shortages across the board as everyone becomes a restaurant worker. We thought we recovered from supply chain issues but we will have created a severe labor shortage problem. This is a policy idea that will go nowhere fast.
Re the tax policy argument for tips: I don't buy that argument at all. Fundamentally, why should compensation for wait staff labor be taxed differently from that received by the warehouse worker, regardless of whether it comes from the employer or the customer? In either case, it's direct compensation for labor and an accession to wealth, regardless of source. See, e.g., section 61 of the Code and Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955). Moreover, what is the basis for enshrining past tax avoidance - the fact that people routinely cheated on their taxes in the pre-credit card era by failing to declare their tips - into the present taxation structure? How is that good tax policy?
Personally, I think that American tip culture is out of hand and just serves to stick it to workers. It strikes me that making tips nontaxable will just incent employers to pay their employees even less, exacerbating the problem. Taken to the extreme, restaurants would just make their wait staff be independent contractors (e.g., like strip clubs do to strippers) such that all of their income is tip derived. If we want to throw low-income tip earners a bone, adjust the rate structure for everyone. Focusing just on the tip aspect is distortive, has no legitimate tax policy basis, and encourages bad employer behavior.
For what it's worth, I see a lot of "tipping" in other contexts. For example, law firms and investment bankers increasingly are taking "discretionary bonus payments" as part of their compensation for deals. While the fees are not mandatory, as a practical matter, clients are going to pay them if they want the service provider to do work for them in the future. Is that to be tax exempt as well?
A good analysis of the restaurant industry, but there are many other types of workers who make the bulk of their earnings in tips. And I think your analysis would not translate well to some of those industries. Many strippers, for example, make the vast majority of their income from tips. (And many strippers, on an hourly basis, are very high earners). Should our federal tax policy effectively allow strippers to earn their income tax-free while teachers, cops, and firefighters have to pay taxes on their income? Same goes for bartenders, camgirls, OnlyFans models, video game streamers, etc. etc. Seems to be both bad policy and bad politics.
Two weeks ago to the day, my hard drive started making not happy noises. And like an idiot, I didn't back it up immediately. My really bad move for the year. Got a new computer today, as they spent a week trying to fix the old one and trying to retrieve some files off the old hard drive. And I'm being driven crazy by Windows 11 that won't let me do anything (almost) that I want! GRRRR! I'm hoping I can find a way to get back to some of the classic Windows layout. How on earth it was supposed to be an improvement is beyond my feeble brain!
Which meant I was watching, sort of, 2 weeks of CNN, MSNBC, and just mock reading bits of Fox. DirectTV has a News Mix that shows all 3 of them on the screen, so I've been hopping between them when I decided I wanted to get more depressed. My verdict - CNN was the worst of the two (Fox is dead last no matter what). More Trumpish than MSNBC, and they insisted on having Trump Pets on nearly every show. MSNBC at least didn't do that. And they did some good. One show Velshi? has been going through Project 2025 daily and breaking it down. Could he do better? Yes. But at least he's doing it.
Can we go back to one-hour or two at most news shows, and just dump the rest of the day? They keep repeating their shows several times a day, at least MSNBC does. And it looks like CNN does as well. They have the same spots, the same comments regardless of show or channel. What kills me is that they keep harping on Harris not doing interviews for them, though McDonnell (I think!) did an excellent piece on why should she given what they failing to do anyway. I guess he went on vacation or something because he's only been seen once since the computer crashed 2 weeks ago. Ditto Rachel Maddow, who didn't impress me at all. She was on maybe twice that I saw, and the first time, she basically laughed through a good part of her show and didn't say much of anything. I guess she's waiting for the DNC to start. Fox and CNN are running nearly nonstop segments likening what's going on with the pro-Palestine protestors (Genocide Joe don't you know) and 1968. They're practically salivating over the riots they expect to see. MSNBC at least has been running clips of Trump's latest inanities, but they just running them without any real context. But that's a bit more than CNN. I keep hearing on both channels that Rs are begging Trump to talk policy and not insults. But nobody's making any comments on what his policies actually are. Especially on Fox, which was practically salivating over his "press conference" with a show-and-tell and his 2 rallies.
I thought about reading the newsletters and comments of the last 2 weeks, but I'm depressed enough right now, and life is too short, so I won't. But in between cursing Windows 11 and trying to download my games and other programs, I'll get around to reading Bulwark and a few other sites. They and Bulwark at least have real news and not repeats of the same material 3 or 4 times a day! So, for now, pleasant dreams everyone!
Not discussed here is the Social Security tax. The extra cash is nice on the short run, but in the long run the money doesn't go into your retirement fund.
Daughters, family members, friends ‘service’ folks…. !
Yep…. Some tips are large, most are NOT….. and they “tip out”, as in share with the bus people, the Hostess at the door, the bar people…. All who help make your visit a good one. And there are some who do not tip…
The problem is that, regardless of the economics, tipping has gotten out of hand (and that’s coming from a big tipper). Eighteen per cent automatic charges to restaurant bills are routine. We’re presented with “opportunities” to tip for just about anything, even when there’s little actual work involved. Other stuff is downright galling: on a recent cab trip, the driver got lost by entering the wrong street name in his GPS despite our stressing the name repeatedly at the beginning of the ride; I was still given the choice of tipping 25%, 28% or 30% (I’m not exaggerating). People are fed up, and you can’t blame anyone who looks askance at a policy of making income from tipping tax free.
I shall date myself… ugh, but way way back in the latter part of the 1980s while working my way through college as a waitress, married with a small child, we used my tips to pay the pediatrician for our first borns well baby checks. We had such a good pediatrician but no real money and no insurance either. And although my husband was a college graduate with an engineering degree, it was 1986 and it was not easy to find a job, the economy was not great. My husband didn’t get an engineering job for a full year, so he worked at SeaTac and loaded cargo planes for 5 bucks an hour and I made 3.85 an hour. We needed those tips! So yeah, you go girl. She knows what’s it like to struggle. And I dont’ mind paying more for people to make more, that’s the right thing. We make more now, so should everyone else.
I’ve read it here a few times, but tipping culture itself is stupid as hell and (not to give the lefties too much credit) grounded in some really nasty history. Just pay people what they should be paid. Full stop. It’s an unsustainable and dumb system with no accountability for anyone. Tipping as a default way of living is dumb.
Guys: This is my favorite comments section discussion in a while. Keep it going. Very proud of you all.
I think that your analysis is a good one but I don’t get the Rebecca thing. How about some classic rock?
Long chat, Good chat… take us home, Rebecca!
I've never been a diligent reader of the comments section, but I ALWAYS am on Bulwark articles...and ESPECIALLY on JVL's pieces. Keep it up, everyone!
Me too, Catherine, me too!!!! (-:
Your best columns tend to be the "commie" ones. It's all about fairness and common sense, based on your own very catholic ethics and morals, not the christian nation-ism bullshit of Trump cranks and weirdos. Châpeau!
Tips You really need to identify tips and who is eligible - otherwise a HUGE LOOPHOLE. I can tip my lawyer, accountant, plumber, stock broker.
Gratuities, as we tipped workers prefer to call them, also is a report on cumulative income for Social Security benefit purposes…
One thing I'm not seeing here that I wonder if a no tax on tips would facilitate is hiring undocumented workers. If a business doesn't pay someone, and their wage is 100% tips, couldn't that make it easier to employ undocumented workers? This is best handled as a local policy (state at the biggest). If this rolls out nationally, I look forward to negotiating my bonu.. ahem, yearly tip from my employer.
I own a restaurant in Savannah Georgia. We pay our servers the federal minimun of $2.13 an hour.
Our OK servers make $25 per hour and our best srvers make $35-$38 an hour. Almost never less then $30 per hour. Right now they pay tax on it all. If the Feds stop taxing tips the best servers will be earning $50-$55 per hour. I will get an even better quality employee. I can see all sorts of retail employees and office workers quitting their jobs to work for me. Also we take some of the servers tips and share them with the hosts and buspeople so good for them.
I also wonder about the servers who work in hoity-toity restaurants in Manhattan. These servers can make $150,000 dollars a year. How is that fair.
Not only would retail and office workers want to quit their low wage jobs to beome tipped employees, so would all wage earners from nursing home employees to truck drivers and everyone in between. This would lead to all kinds of labor shortages across the board as everyone becomes a restaurant worker. We thought we recovered from supply chain issues but we will have created a severe labor shortage problem. This is a policy idea that will go nowhere fast.
Re the tax policy argument for tips: I don't buy that argument at all. Fundamentally, why should compensation for wait staff labor be taxed differently from that received by the warehouse worker, regardless of whether it comes from the employer or the customer? In either case, it's direct compensation for labor and an accession to wealth, regardless of source. See, e.g., section 61 of the Code and Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955). Moreover, what is the basis for enshrining past tax avoidance - the fact that people routinely cheated on their taxes in the pre-credit card era by failing to declare their tips - into the present taxation structure? How is that good tax policy?
Personally, I think that American tip culture is out of hand and just serves to stick it to workers. It strikes me that making tips nontaxable will just incent employers to pay their employees even less, exacerbating the problem. Taken to the extreme, restaurants would just make their wait staff be independent contractors (e.g., like strip clubs do to strippers) such that all of their income is tip derived. If we want to throw low-income tip earners a bone, adjust the rate structure for everyone. Focusing just on the tip aspect is distortive, has no legitimate tax policy basis, and encourages bad employer behavior.
For what it's worth, I see a lot of "tipping" in other contexts. For example, law firms and investment bankers increasingly are taking "discretionary bonus payments" as part of their compensation for deals. While the fees are not mandatory, as a practical matter, clients are going to pay them if they want the service provider to do work for them in the future. Is that to be tax exempt as well?
I love it when JVL lifts his skirt a bit and shows us a little Communist leg! :-)
A good analysis of the restaurant industry, but there are many other types of workers who make the bulk of their earnings in tips. And I think your analysis would not translate well to some of those industries. Many strippers, for example, make the vast majority of their income from tips. (And many strippers, on an hourly basis, are very high earners). Should our federal tax policy effectively allow strippers to earn their income tax-free while teachers, cops, and firefighters have to pay taxes on their income? Same goes for bartenders, camgirls, OnlyFans models, video game streamers, etc. etc. Seems to be both bad policy and bad politics.
I'm ba-ack! So this is going to be a semi-rant.
Two weeks ago to the day, my hard drive started making not happy noises. And like an idiot, I didn't back it up immediately. My really bad move for the year. Got a new computer today, as they spent a week trying to fix the old one and trying to retrieve some files off the old hard drive. And I'm being driven crazy by Windows 11 that won't let me do anything (almost) that I want! GRRRR! I'm hoping I can find a way to get back to some of the classic Windows layout. How on earth it was supposed to be an improvement is beyond my feeble brain!
Which meant I was watching, sort of, 2 weeks of CNN, MSNBC, and just mock reading bits of Fox. DirectTV has a News Mix that shows all 3 of them on the screen, so I've been hopping between them when I decided I wanted to get more depressed. My verdict - CNN was the worst of the two (Fox is dead last no matter what). More Trumpish than MSNBC, and they insisted on having Trump Pets on nearly every show. MSNBC at least didn't do that. And they did some good. One show Velshi? has been going through Project 2025 daily and breaking it down. Could he do better? Yes. But at least he's doing it.
Can we go back to one-hour or two at most news shows, and just dump the rest of the day? They keep repeating their shows several times a day, at least MSNBC does. And it looks like CNN does as well. They have the same spots, the same comments regardless of show or channel. What kills me is that they keep harping on Harris not doing interviews for them, though McDonnell (I think!) did an excellent piece on why should she given what they failing to do anyway. I guess he went on vacation or something because he's only been seen once since the computer crashed 2 weeks ago. Ditto Rachel Maddow, who didn't impress me at all. She was on maybe twice that I saw, and the first time, she basically laughed through a good part of her show and didn't say much of anything. I guess she's waiting for the DNC to start. Fox and CNN are running nearly nonstop segments likening what's going on with the pro-Palestine protestors (Genocide Joe don't you know) and 1968. They're practically salivating over the riots they expect to see. MSNBC at least has been running clips of Trump's latest inanities, but they just running them without any real context. But that's a bit more than CNN. I keep hearing on both channels that Rs are begging Trump to talk policy and not insults. But nobody's making any comments on what his policies actually are. Especially on Fox, which was practically salivating over his "press conference" with a show-and-tell and his 2 rallies.
I thought about reading the newsletters and comments of the last 2 weeks, but I'm depressed enough right now, and life is too short, so I won't. But in between cursing Windows 11 and trying to download my games and other programs, I'll get around to reading Bulwark and a few other sites. They and Bulwark at least have real news and not repeats of the same material 3 or 4 times a day! So, for now, pleasant dreams everyone!
Not discussed here is the Social Security tax. The extra cash is nice on the short run, but in the long run the money doesn't go into your retirement fund.
Daughters, family members, friends ‘service’ folks…. !
Yep…. Some tips are large, most are NOT….. and they “tip out”, as in share with the bus people, the Hostess at the door, the bar people…. All who help make your visit a good one. And there are some who do not tip…
It is a tough gig!!!!
SEEMS LOADED ALL WRONG. Employers should be made to pay a good wage and on a scale for time served increases too.
Tell me it is good when Mary Barra is paid $100K/yr in salary and $10M/year in tips.
—Dave
The problem is that, regardless of the economics, tipping has gotten out of hand (and that’s coming from a big tipper). Eighteen per cent automatic charges to restaurant bills are routine. We’re presented with “opportunities” to tip for just about anything, even when there’s little actual work involved. Other stuff is downright galling: on a recent cab trip, the driver got lost by entering the wrong street name in his GPS despite our stressing the name repeatedly at the beginning of the ride; I was still given the choice of tipping 25%, 28% or 30% (I’m not exaggerating). People are fed up, and you can’t blame anyone who looks askance at a policy of making income from tipping tax free.
I shall date myself… ugh, but way way back in the latter part of the 1980s while working my way through college as a waitress, married with a small child, we used my tips to pay the pediatrician for our first borns well baby checks. We had such a good pediatrician but no real money and no insurance either. And although my husband was a college graduate with an engineering degree, it was 1986 and it was not easy to find a job, the economy was not great. My husband didn’t get an engineering job for a full year, so he worked at SeaTac and loaded cargo planes for 5 bucks an hour and I made 3.85 an hour. We needed those tips! So yeah, you go girl. She knows what’s it like to struggle. And I dont’ mind paying more for people to make more, that’s the right thing. We make more now, so should everyone else.
Also, please re-watch the brilliant scene in Reservoir Dogs regarding waitresses and tipping, it’s a great way to get radicalized about this subject.
I’ve read it here a few times, but tipping culture itself is stupid as hell and (not to give the lefties too much credit) grounded in some really nasty history. Just pay people what they should be paid. Full stop. It’s an unsustainable and dumb system with no accountability for anyone. Tipping as a default way of living is dumb.