Comment: Trump, Harris should focus on living wage, not tips

[Yo_Mama_Been_Loggin]

By Betsey Stevenson / Bloomberg Opinion

Eliminating taxes on tips is an idea with bipartisan appeal, with both Donald Trump and Kamala Harris embracing it. But that is not the same as saying it is a good idea; and if the motivation is to improve wages and reduce income anxiety for low-paid workers, there is a far better way to do it.

Advocates for the policy say it would alleviate a financial burden on service workers, who are among the lowest-paid in the country. In 2023, the median weekly wage for tipped occupations was just $538, compared to $1,000 for non-tipped workers. These lower wages explain why 37 percent of tipped workers, according to the Yale Budget Lab, don’t currently owe any federal income taxes at all. The higher-earning 63 percent would still benefit from a policy change.

That said, if any of my economics students had proposed this idea, they would have received a failing grade. Any tax policy should be judged across three dimensions: the incentives it creates, the fairness it promotes, and the distortions it generates. It is rare to see a proposal that fails on all three.

Taking incentives first: If tips are no longer taxable income, then people will want to get as much income as possible in tips. Policymakers are aware of this challenge and are promising to ensure that only leisure and hospitality workers can take advantage of this new benefit. But Americans are creative, particularly when it comes to avoiding taxes. Such a policy would be the beginning of a long cat-and-mouse game between companies searching for loopholes and the IRS.

https://www.heraldnet.com/opinion/comment-trump-harris-should-focus-on-iiving-wage-not-tips/

[CrispyQ]

1. So the "tips" SCOTUS receive won't be taxable either, right?

???

[getagrip_already]

5. There would be income limits, as well as job restrictions,

So no.

Under tsf's plan though, yes.

[jimfields33]

2. I'd say that if Vice president Harris changes this idea,

She should do it immediately and not keep those excited about it to keep anticipating it. I think that’s unfair.

[getagrip_already]

6. Why?

It will require legislation, which will change it regardless of what is proposed now.

Dont get excited over a proposal.

First, she needs to get elected. Then we need to keep the senate, and retake the house.

Then we need to get a bill shaped and passed, along with all the other bills we absolutely need to shape and pass.

[Fiendish Thingy]

3. Yup.

I know the no-tax-on-tips is a pander specifically to voters in Las Vegas, and could certainly help win the state, but raising the federal minimum wage to $15/hr would benefit millions more workers, and should be one of the cornerstones of Harris’ economic policy.

[Mosby]

4. It's a bad idea.

I support getting rid of tipping all together.