Both Political Parties Back Ending Taxes on Tips, With Potentially Massive Ramifications for Service Workers

Sometimes, great ideas come from unlikely sources. According to reports, Republican frontrunner Donald Trump, inspired by a Las Vegas cash-conscious waitress, proposed ending taxes on tips to energize service workers and differentiate himself from opponents. But, as luck would have it, Trump’s effort to end tip taxation is no longer a GOP-exclusive affair.
- At a recent campaign event, Vice President Kamala Harris also endorsed ending tip taxes and received support from the Culinary Workers Union Local 226.
- With both major presidential candidates backing this idea, it’s increasingly likely to be included in the winner’s tax plan.
Taxing on the system: Similar bipartisan bills have been incubated in recent months, but despite the appeal of the proposed legislation, economists are less enthusiastic. They cite hundreds of billions in lost tax revenue, the risk of exploitation by larger companies, and insufficient oversight. Urban-Brookings Tax Policy’s Steve Rosenthal, who has helped develop tax legislation, simply attributes these issues to the campaign season — or “silly season” as he calls it.




