No tax on tips will harm more workers than it helps--EPI

[June Zaccone]

No tax on tips will harm more workers than it helps
Proposals in Congress and now 20 states could encourage harmful employer practices and lead to tip requests in virtually every consumer transactionWhen President Trump proposed exempting tipped income from taxation during his 2024 presidential campaign, many viewed it as a politically expedient gimmick to win support among tipped service workers. Unfortunately, then-Vice President Harris soon followed suit, and since the election, a federal “no tax on tips” bill has been reintroduced and lawmakers in at least 20 states have proposed similar bills (see map below).

Now that lawmakers in a multitude of states have supported the idea, it’s worth unpacking just how incredibly foolish and dangerous these proposals are. In summary, exempting tips from taxes would:

1. help very few workers and undermine pay increases for many more;
2. expand the use of tipped work—a system rife with discrimination and worker abuse— potentially leading to consumers being asked to tip on virtually every purchase; and
3. deplete state and federal budgets and create new avenues of tax avoidance, especially for high earners.....

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June Zaccone
National Jobs for All Network
http://www.njfac.org