TRUMP’S LAS VEGAS IDEA FOR LABOR
Picture Credit: The Daily Indy July 3, 2024
On this Labor Day 2024, we look back to Donald Trump’s proposal to end income tax on tips. Trump reportedly got the idea when he asked a waitress what he needed to do to win her vote. She replied that he should eliminate the income tax on tips, and he ran with the idea.
At a campaign rally shortly afterward on June 9, 2024, only miles from the Las Vegas Strip, Trump said, “Hotel workers and people that get tips, you’re going to be very happy because when I get to office, we are going to not charge taxes on tips. We’re going to do that right away, first thing in office.”1
The hotel workers’ union, the Culinary Workers Union Local 226, immediately panned the proposal,[1] ignoring U.S. Bureau of Labor Statistics estimates that there are 2.24 million waiters and waitresses across the country with tips making up a large percentage of their incomes.[2] Nevada has the highest concentration of tipped workers, with about 25.8 waiters and waitresses per 1,000 jobs, followed by Hawaii and Florida.2
Congress Member Richie Neal, MA-01, stated that raising the minimum wage would be a more efficient way to help workers and that Trump's proposal was motivated more by politics than serious tax policy.1 Others have said that if people knew that hotel workers did not pay tax on tips, people would pay lower tips.1
But Trump immediately gained support on Capitol Hill. Congress Member Greg Steube, FL-17, who sits on the House Ways and Means Committee, thinks dropping taxes on tips would be a great idea.1 Following Trump's lead, Congress Member Thomas Massie, KY-04, introduced the "Tax Free Tips Act of 2024" on June 18, 2024. You can read the legislation here:
https://gaetz.house.gov/sites/evo-subsites/gaetz.house.gov/files/evo-media-document/FILE_2376.pdf.
However, Mr. Massie’s bill may be more familiar than one would think. Congressman Ron Paul introduced the "Tax Free Tips Act(s)" in 2007 (HR 3664, 110th Congress), 2009 (HR 779, 111th Congress), and 2011 (HR1139, 112th Congress).
Shortly after Trump came up with the idea of doing away with taxes on tips, Kamala Harris became the Democratic nominee for President. Harris pilfered Trump’s idea, making it hers. The idea must have traction.
The idea, of course, has its critics. APNews.Com writes: “The Committee for a Responsible Federal Budget, a nonpartisan fiscal watchdog group, has estimated that exempting tips from income and payroll taxes would reduce federal revenues by $150 billion to $250 billion over the next decade.
“The committee said exempting tips from taxation would also lead employers and workers to reclassify wages as tips where possible. The more that happens, the more that federal deficits would increase. A 10% increase in tips, for example, would bump up the committee’s projection for lost federal revenue to a range of $165 billion to $275 billion over the next decade.”2
We share some of that skepticism, and we partly agree with Congress Member Richie Neal that exempting tips from income taxation may not be the most efficient way to help workers. However, we disagree with Mr. Neal about what would be more efficient. A more efficient way to help workers on this Labor Day would be to exempt ALL income from taxation and adopt the FAIRtax. The FAIRtax stops picking winners and losers, benefits the entire economy, and puts you in control of when and how much tax you pay.
I would love to hear your comments about Mr. Trump’s proposal.
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As a reminder, event insurance coverage is available, but you must let us know. Once the event is underway, it's too late. If you are planning an event, let me know the who, what, when, and where, and I will get you a certificate of insurance.
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At a campaign rally shortly afterward on June 9, 2024, only miles from the Las Vegas Strip, Trump said, “Hotel workers and people that get tips, you’re going to be very happy because when I get to office, we are going to not charge taxes on tips. We’re going to do that right away, first thing in office.”1
The hotel workers’ union, the Culinary Workers Union Local 226, immediately panned the proposal,[1] ignoring U.S. Bureau of Labor Statistics estimates that there are 2.24 million waiters and waitresses across the country with tips making up a large percentage of their incomes.[2] Nevada has the highest concentration of tipped workers, with about 25.8 waiters and waitresses per 1,000 jobs, followed by Hawaii and Florida.2
Congress Member Richie Neal, MA-01, stated that raising the minimum wage would be a more efficient way to help workers and that Trump's proposal was motivated more by politics than serious tax policy.1 Others have said that if people knew that hotel workers did not pay tax on tips, people would pay lower tips.1
But Trump immediately gained support on Capitol Hill. Congress Member Greg Steube, FL-17, who sits on the House Ways and Means Committee, thinks dropping taxes on tips would be a great idea.1 Following Trump's lead, Congress Member Thomas Massie, KY-04, introduced the "Tax Free Tips Act of 2024" on June 18, 2024. You can read the legislation here:
https://gaetz.house.gov/sites/evo-subsites/gaetz.house.gov/files/evo-media-document/FILE_2376.pdf.
However, Mr. Massie’s bill may be more familiar than one would think. Congressman Ron Paul introduced the "Tax Free Tips Act(s)" in 2007 (HR 3664, 110th Congress), 2009 (HR 779, 111th Congress), and 2011 (HR1139, 112th Congress).
Shortly after Trump came up with the idea of doing away with taxes on tips, Kamala Harris became the Democratic nominee for President. Harris pilfered Trump’s idea, making it hers. The idea must have traction.
The idea, of course, has its critics. APNews.Com writes: “The Committee for a Responsible Federal Budget, a nonpartisan fiscal watchdog group, has estimated that exempting tips from income and payroll taxes would reduce federal revenues by $150 billion to $250 billion over the next decade.
“The committee said exempting tips from taxation would also lead employers and workers to reclassify wages as tips where possible. The more that happens, the more that federal deficits would increase. A 10% increase in tips, for example, would bump up the committee’s projection for lost federal revenue to a range of $165 billion to $275 billion over the next decade.”2
We share some of that skepticism, and we partly agree with Congress Member Richie Neal that exempting tips from income taxation may not be the most efficient way to help workers. However, we disagree with Mr. Neal about what would be more efficient. A more efficient way to help workers on this Labor Day would be to exempt ALL income from taxation and adopt the FAIRtax. The FAIRtax stops picking winners and losers, benefits the entire economy, and puts you in control of when and how much tax you pay.
I would love to hear your comments about Mr. Trump’s proposal.
---------------------------------------------------------
WE'VE GOT YOU COVERED – IF YOU LET US KNOW.
As a reminder, event insurance coverage is available, but you must let us know. Once the event is underway, it's too late. If you are planning an event, let me know the who, what, when, and where, and I will get you a certificate of insurance.
---------------------------------------------------------
TAKE BACK CONTROL!
[1] Gabby Birenbaum, writing in The Daily Indy, “Will Trump's Las Vegas idea to end taxation on tips catch on?” July 3, 2024.
[2] Kevin Freking and Josh Boak, writing in Apnews.com, “Trump is proposing to make tips tax-free. What would that mean for workers?" June 21, 2024.
Jim Bennett
AFFT Grassroots Coordinator & Secretary
AFFT Grassroots Coordinator & Secretary
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