Former President Donald Trump and Vice President Kamala Harris agree on one thing, at least: Both say they want to eliminate federal taxes on workers’ tips.
But experts say there’s a reason Congress hasn’t made such a change already. It would be complicated, not to mention enormously costly to the federal government, to enact. It would encourage many higher-paid workers to restructure their compensation to classify some of it as “tips” and thereby avoid taxes. And, in the end, it likely wouldn’t help millions of low-income workers.
Harris’ campaign has said she would work with Congress to draft a proposal that would include an income limit and other provisions to prevent abuses by wealthy individuals who might seek to structure their compensation to classify certain fees as tips. Republican supporters of Trump argue that Hines' concerns are overblown. Darin Miller, a spokesman for Sen. Ted Cruz of Texas, said the Internal Revenue Service has a precise definition for tips and contended that reclassifying wages would be considered fraud.
The Budget Lab at Yale, a non-partisan policy research center, estimates that there were 4 million U.S. workers in tipped occupations in 2023. That amounted to about 2.5% of all employees, including restaurant servers and beauticians. “If the issue is you’re concerned about low-income taxpayers, there are a lot better ways to address that problem, like expanding the Earned Income Tax Credit or changing tax rates or changing deductions,” Hines said.Changing federal tax policy on tips would also be costly. The Committee for a Responsible Federal Budget, a non-partisan group, estimates that exempting all tip income from federal income and payroll taxes would reduce revenue by $150 billion to $250 billion between 2026 and 2035.
Mr Musk, the billionaire owner of X, blamed the glitches on a cyber-attack but one expert told the BBC that was unlikely.Morrison feared ‘fatal outcome’ for Reynolds; Trump rambles with Musk; and Pelosi and Keating trade barbsMikel Arteta prefers not to leave things to chance. The Arsenal manager is a believer in data, percentages and minimising footballing risk.
Donald Trump Income Taxes Federal Income Taxes Payroll Taxes Federal Taxes James Hines Trump's Campaign Congress Tips
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