NO TAX ON TIPS—A SIMPLE IDEA UNTIL CONGRESS GOT INVOLVED
Here is a slide that shows the typical Congressional/bureaucratic response to a simple problem.
Department of Simple Ideas
Office of Complexity Management
Form 10-L
Simple Idea Implementation Request
Section A — Plain-Language Idea
Describe your simple idea in 10 words or fewer.
“Fill the pothole on 3rd Street.”
Section B — Government Translation
Translate into official language and attach 12 pages.
• Initiate Pothole Mitigation & Equity Initiative (PMEI)
• Publish Environmental Narrative & 90-day comment period
• Establish Interagency Arboreal Stakeholder Consultative Roundtable (I-ASCR)
• Phase 0: Pre-Asphalt Readiness Assessment
Section D — Safety & Neutrality
Affirm your idea contains no chairs, ladders, wires, liquids, or opinions.
Applicant Signature Date (Upon Final Rulemaking)
Public Burden Estimate: 90 minutes (plus 18 months of comments)
The above example helps explain the legislation that Congress passed in response to President Trump’s promise to help people who receive tips as a major part of their income.
A recent article at jdsupra.com discussed the Treasury Department’s “preliminary list” of 68 occupations that may claim a tax deduction for tips.
Here are some of the articles main points:
- The One Big Beautiful Bill Act, instead of no tax on all tips, said that certain tips will not be taxable up to $25,000 if the requirements are met.
- To qualify, individuals must make less than $150,000 or $300,000 for a married couple.
- Also, you must be working at a job that “customarily and regularly received tips” on or before December 31, 2024.
- There are eight categories of jobs which are allowed to claim the deduction.
- Most make sense—like waiters, bartenders and parking attendants.
- Some are curious—Self-Enrichment Teachers—what are those?
- Others are not normally associated with getting tips—like residential plumbers, air conditioning mechanics and installers, locksmiths and residential electricians.
The article stresses that these are preliminary lists and there will be new forms to create that will need to be filed to qualify for this tip exclusion from income.
There are some curious occupations on the list— electricians, plumbers, a/c installers and repair people. They must have a good lobby. Of course, many pages of regulations will be required to ensure that providers do not reduce their charges if you agree to give them a tip.
You can easily see how this will spiral into more bureaucracy and complications.
Two-thirds of taxpayers pay more in federal payroll taxes than in personal income taxes. If Congress really wanted to help the lower income people, as they proclaim, then wouldn’t this “no tax on tips provision” exempt tip income from payroll taxes?
It doesn’t. A single parent with two children who receives $25,000 in tips and $20,000 in wages today pays no federal income taxes--after deducting child tax credits and the impact of the earned income tax credit. But, they will still pay $3,442 in payroll taxes.
After the exclusion of $25,000 in tip income, the single parent with two children still pays no federal income tax but still pays $3,442 in payroll taxes.
CONCLUSION
Mr. President, if you really want “no tax on tips”, why try to accomplish this through the broken and destructive income/payroll tax system?
Under the FAIRtax, the single parent with two children will pay no FAIRtax on the first $45,000 of retail purchases of goods and for services because of the family consumption allowance. They will not owe payroll taxes because the FAIRtax replaces the payroll taxes.
Every dollar earned will be theirs to keep. If they earn more than $25,000 in tips, they will pay no tax until that money is spent on new retail goods and services. If they decide to purchase a used car there is no FAIRtax.
Let’s reward people who earn more and let all of us determine how much federal tax they pay.
If there was no alternative to the irrational and unfair income/payroll tax system, U.S. citizens would just have to tolerate it “for the good of the country.”
However, there is an alternative—the FAIRtax, a national retail sales tax on new retail goods and retail services. The FAIRtax provides a family credit so that all purchases up to the poverty level for each family are not taxed. There is no withholding from your paycheck and YOU NEVER HAVE TO FILE A TAX RETURN TELLING THE GOVERNMENT HOW MUCH YOU EARNED AND HOW MUCH YOU SPENT.
Many of you have labored tirelessly for freedom from the federal income tax and the IRS. You deserve a great deal of credit for your efforts to educate the American people on the need to fund the American government in a way that is good for America and returns freedom to the American people.
It is imperative, though, that we don’t replace the current income tax and the IRS with an alternative system that can still be manipulated by the Ruling Elite. We must let Congress and the President know that the best way to replace the income tax and the IRS is with the FAIRtax.
Make no mistake about it. The FAIRtax is a grave threat to the Ruling Elites. It will strip them of their power and their ability to control us though the tax system. Their opposition to the FAIRtax will be fierce and unrelenting. And don’t think for an instant that they won’t use half-truths, deception and downright lies in their desperate attempt to hang on to their power.
However, with the support of this President, we can finally eliminate the income tax and the IRS!!!
Of course, the best course of action is to not only repeal the income tax and abolish the IRS but to repeal the 16th Amendment as well so no future administration can ever shackle the American people with an income tax again.
We must come together and ensure that real tax reform, the FAIRtax, is not subverted by the Elites in D.C.
This will take the diligent efforts of all of us. We need your financial assistance, and we need your grass roots assistance.
If you have contacts that will allow us to get more information to President Trump about the FAIRtax please let us know.
Please email us at info@fairtax.org and we will give you some options on how you can best help us.
At a minimum, please call your Congressional representative and ask if he or she supports the FAIRtax. If so, thank him/her for their support and suggest they become a cosponsor of HR-25 if they’re not one already. If not, ask why not. If your representative claims to be unfamiliar with the FAIRtax, offer to have someone come to their office and explain it to them.
Please go to this link to invest in AFFT and help us pass the FAIRtax. It’s an investment in your and your family’s future.
THE SOLUTION—PASS THE FAIRTAX!
Why would D.C. pass the FAIRtax and give up this almost unlimited source of donations? The only way that they will is if the rest of us demand it!
Isn’t it time to end this ludicrous tax collection system and the IRS?
HELP BRING ABOUT REAL TAX REFORM AND STOP FUTURE IRS ABUSES
By contributing (investing) $10.40 per month, you help provide a financial base to AFFT. If you can make larger contributions (investments), these will be used not for salaries, as we are all volunteers, but for the needed updates to our economic studies which will be vital for all future years.
Please go to this link to invest in AFFT and help us pass the FAIRtax. It’s an investment in your and your family’s future.