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submitted 3 months ago* (last edited 3 months ago) by FundMECFSResearch@lemmy.blahaj.zone to c/news@lemmy.world

Why it matters: Typically, ideas like these are tough to turn into reality, but next year when the Trump tax cuts expire, Congress will likely pass some kind of new tax bill.

  • That creates an opportunity to put new policies in place, says Brendan Duke of the Center for American Progress Action Fund.

The intrigue: Where things start to get wild is outside the restaurant industry, as Americans try to figure out ways to classify more of their income as tips. Think bankers' bonuses or sales commissions — or even pay for a Substack writer or freelance podcaster.

  • The U.S. tax code already has different rules for different kinds of income — capital gains, for example, are taxed at a lower rate than payroll income.
  • When those kinds of divides happen, you create enormous incentives for people to game the system, says Howard Gleckman, a senior fellow at the Tax Policy Center.
  • Those kinds of shenanigans typically happen with higher earners — think of the carried interest tax loophole, for example.

For the record: An official from the Harris campaign said the policy would include "strict requirements to prevent hedge fund managers and lawyers from structuring their compensation in ways to try to take advantage of the policy."

  • Trump's campaign hasn't offered much in the way of detail.
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[-] snooggums@midwest.social 74 points 3 months ago

For the record: An official from the Harris campaign said the policy would include “strict requirements to prevent hedge fund managers and lawyers from structuring their compensation in ways to try to take advantage of the policy.”

I'm sure they want to do that, but it will fail and be abused just like independent contract work, civil forfeiture, and everything else that has an intended specific use case that gets changed over time to be abused by the powerful. This approach will make it so anyone can claim a monetary exchange was a tip and put the burden on the government to prove it wasn't, which is just ripe for abuse the moment it becomes law.

Tips as someone's base income is a cancer on society. Just make companies pay living wages instead.

[-] Volkditty@lemmy.world 18 points 3 months ago

And those "strict requirements" would be written by lawyers and lobbyists for the hedge fund managers, so you know you can trust them.

[-] Buffalox@lemmy.world 11 points 3 months ago* (last edited 3 months ago)

I'm pretty sure the Harris suggestion requires you are specifically working as a waiter and a few other specific job descriptions.
So the possibility for abuse by "the powerful" does not seem possible to do legally.
People can always cheat illegally, which can work for years, but there's a risk to be found out.

Personally I'm against making tips tax free, because it seems to be a bad solution to a problem of low wages in service industries.
But on the other hand, if it's not politically possible with a better solution, I guess it's better than nothing.

[-] mojo_raisin@lemmy.world 4 points 3 months ago* (last edited 3 months ago)

I'd like to see a multi-phase federal plan with the clearly stated ultimate goal to phase out tips. This plan should have clearly defined beginning, milestones, and end so that workers and businesses could plan around it and everyone would be on the same-ish page or at least know what's going on.

  1. Stop taxing tips on specific jobs/industries combined with bringing up the minimum wage for all workers to standard (no $2.50/hr wage for tipped waiters, etc).

  2. Start an educational program that talks about the history and effects of tipping culture and why this program is good to try to stop it

  3. Start a government program that encourages reduced tipping, promoting specific percentages (e.g. 10% for restaurant table service) to consciously try to move the culture, this should go along with an increase in minimum wage that effectively makes up for the reduced tip. Repeat this step if needed to slowly step-down from tipping culture into one based on labor appropriately compensated by the employers.

  • This will help people know what to expect on both sides of transactions
  • This can reduce negative feelings associated with not giving a large tip because you know this is all part of a plan and the employer is expected be following the law and increasing compensation.
  • This will provide cover for business to increase their prices accordingly, and simultaneously the government can put out guidance about how much prices should be expected to rise and how your total bill won't really change much.

The end goals should be clearly stated, something like

  • A person working 40 hours/wk at minimum wage should be able to afford a basic, clean, up-to-standard 1-bedroom apartment, food, and transport, and basic medical care.

Hopefully, culturally, tipping changes to be seen as like " 'the old way', weird old people like paying service workers to feel superior".

[-] mercano@lemmy.world 60 points 3 months ago

I think this policy is a mistake. I think the US should be moving away with tipping, and this will just make it harder. European restaurants work this way and don’t seem to be suffering.

I hate having to judge a waitress, barber, or driver after receiving service then doing math on the bill. Worse yet is housekeeping at a hotel; you’re expected to leave them a tip when you don’t even know what kind of job they’re going to do. Just charge me on the bill whatever it costs to pay these people fairly and stop making me make up the difference.

[-] ravhall@discuss.online 9 points 3 months ago

I will charge $1 for software development, with a $10,000 tip.

[-] oxjox@lemmy.ml 4 points 3 months ago

European restaurants work this way and don’t seem to be suffering.

I was in London a couple months ago for my first trip to Europe. I'm still trying to figure out the economics of the pubs.

How are the servers at pubs being paid in a manner that they're able to live in or close to London? Aren't they paying significantly more in taxes than US workers? They all seemed very pleasant and gracious, presumably with the promise of a known paycheck. They really didn't have much to do other than pull a tap handle. The beers were all very reasonably priced (often 10-25% less than at American bars). I wonder if these pubs are subsidized in some way to keep the prices low and the wages reasonable. How are businesses taxed in London / Europe compared to the US? Perhaps higher wage taxes and lower business taxes means employers can pay their staff more?

The experience is still living in my head as if I had visited a land in a fairytale (or could just be because London).

My point really is that local economics would likely change drastically simply by making this one change. I know a lot of bartenders and servers - they make far more on tips than if they were paid a living wage. I don't know one person who would prefer an hourly wage. There's so many pieces to the puzzle that I'm not able to jot down right now but I wonder if the US could maintain the number of restaurants and bars it has if it were to shift servers to a salary.

[-] EvacuateSoul@lemmy.world 3 points 3 months ago

People tip the housekeeper?

[-] Maeve@kbin.earth 1 points 3 months ago

The industry standard in the nearest tourist trap near me is $7.25-8.00 to start. I'm in a red state, though.

[-] WillBalls@lemmy.world 1 points 3 months ago

I've never done it and now I feel bad :(

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[-] AA5B@lemmy.world 2 points 3 months ago

They should make this tax free because the current system criminalizes normal behavior. There’s a huge amount of tax fraud, yet not worth much in the grand scheme of things and not worth enforcement. This just means they are no longer criminals and the honest people are no longer punished for honesty in something where they realism can’t get caught.

[-] Xatolos@reddthat.com 2 points 3 months ago* (last edited 3 months ago)

As someone who lives in the EU and travels to different EU (and the UK) countries, tipping is becoming a thing here.

Was just in Scotland, one place had mandatory 10% tip on the bill, another place "questioned" (complained) that the tip wasn't high enough for them. I've also seen it in other countries, typically on the machines to pay. I think it's because it's easy to put there and people are more likely to hit a yes option.

Isn't as high % expected as in the US and Canada, but it's showing up here.

[-] Eximius@lemmy.world 1 points 3 months ago

Funny how tipping and recession (UK) goes hand-in-hand.

[-] Melody@lemmy.one 1 points 3 months ago

In general I don't usually tip because of this. It's not my place to pay them a living wage; it's the employer's job. If more Americans would take this stance and make it impossible for employers to hire at sub-minimum wages; this culture would go away.

I have to receive more than above-and-beyond service to even consider tipping; and then it's only when I have the funds to do so. I don't appreciate tipping pressure either; and I will actively not tip when people are pressuring me to do so; or when the execution of the transaction itself needlessly provides a prompt to tip when there's really no reason to tip anyone who doesn't care or provide more than their basic job in service.

Frequently there's no reason to tip in most service contexts; as there's no additional work being done; or assistance being asked of the employee. In some limited contexts there's justification for tipping; but it's very limited justification, and it really comes down to a couple questions: 'Did the employee provide a service that was far more exceptional than would be reasonably expected of them to perform', and, 'Was that performance given merely because it was asked or needed to accommodate you as a customer and your immediate and obvious needs'?

In some contexts, in some jobs, those opportunities to go above and beyond do exist. In those contexts...tip if you feel it's appropriate. In many other service jobs; the employer has brutally optimized and taken complete management over the efficiency and tasks being performed and; as such; they should assume the responsibilities of ensuring that an employee gets paid sufficiently, but also gets opportunity to get paid for reliable, superb or consistent superior performance.

[-] ByteOnBikes@slrpnk.net 9 points 3 months ago

What sucks is your act of defiance only screws over the worker.

The employer got paid no matter what.

[-] jacksilver@lemmy.world 4 points 3 months ago

I get that, but also we shouldn't have 1/5 of the bill (if 25% tip) hidden behind an expected tip.

I hate the fact that taxes aren't required to be included with the price.

[-] Melody@lemmy.one -4 points 3 months ago

The worker is expected to refuse to work with companies insisting on the tipped+subpar pay schema. They chose to enter into the agreement anyways.

[-] ignirtoq@fedia.io 46 points 3 months ago

next year when the Trump tax cuts expire

It's worth repeating again that the middle class Trump tax cuts expire next year. The Trump tax cuts for the wealthy have no expiration date and are permanent.

Also, they're not "Trump" tax cuts but Republican tax cuts, but at this point the distinction doesn't really mean anything anymore since Trump has completely taken over the party.

[-] oxjox@lemmy.ml 11 points 3 months ago

I remember when this was signed. My jaw dropped when I read it while I knew it would get swept under the rug and forgotten about. I specifically said to myself, this is a ruthless attempt to set up the democrats to look bad after his first term.

This shouldn't be a surprise to anyone. We should be taking a very hard look at why it is.

[-] AA5B@lemmy.world 3 points 3 months ago

I just wish the exemption caps would also expire. While I never did the math, I think people like me paid more because of the stupid cap, regardless of the lower tax rate. It’s not just the wealthy who pay a ton of state and local taxes, but also many of us in high cost of living states. I’ve still been able to itemize, but now I can’t exempt state and local taxes so it doesn’t get me much. And I pay tax on the taxes I pay. Yay, double taxation /s

[-] someguy3@lemmy.world 32 points 3 months ago

It means more and more businesses will try to become tipping businesses.

[-] sunzu2@thebrainbin.org 10 points 3 months ago

All of then are already trying.

I don't tip unless hair or food. And I tip cash. Fuck these "owners" haha

I never signed for paying cooks wages 🤡

[-] treadful@lemmy.zip 3 points 3 months ago

Then mandatory tips, and tip sharing with the CEO...

[-] SeaJ@lemm.ee 25 points 3 months ago

No. Income is income. I also don't want to encourage businesses to have their employees really on tips.

[-] spyd3r@sh.itjust.works -1 points 3 months ago

Shouldn't be taxed in income either

[-] SeaJ@lemm.ee 3 points 3 months ago

Sorry that you hate the poor and middle class.

[-] spyd3r@sh.itjust.works 0 points 3 months ago

The poor and middle class are the only ones paying income tax...

[-] SeaJ@lemm.ee 1 points 3 months ago
[-] Steve@communick.news 18 points 3 months ago* (last edited 3 months ago)

The more complicated things are, the easier they are to manipulate and abuse.

All wages, salaries, bonuses, tips, any cash given as compensation for labor performed, should all be taxed one way.

Any rents, capital gains, interest, anything gained by simply owning or selling something owned, should be taxed another way.

Any extraction of natural resources should be taxed a third way.

[-] phoenixz@lemmy.ca 16 points 3 months ago

Just outlaw tipping. I HATE the tip tax, it only exists so that companies can cheat their customers and somehow they managed to convince some servers that it's a good thing

If you think about it, the entire idea is stupid. Just pay your servers an honest living, put realistic prices on your menus and you're done.

I don't tip my plumber, I don't tip my doctor, I don't tip my accountant, I don't tip the cook, but for some reason I have to tip the waiter?

Just pay the guy / gal an honest living and stop screwing over your customers.

I've been to places where tipping is required while starting at fracking 25%. What the frack? And tipping is spreading as well. Now I can tip my baker too for giving me the bread that I just paid for. WTF?

No.more tipping

[-] AbsoluteChicagoDog@lemm.ee 2 points 3 months ago

But then the capitalists would lose a tool to keep the working class divided. That's why neither party will ever get rid of tipping. It makes it easy to blame other working class people for your low pay and not the corporate employer who actually sets the pay.

[-] Freefall@lemmy.world 13 points 3 months ago

Tipping needs to die. It should AT MOST go back to being a "thanks for abnormally good service" bonus.

[-] aniki 6 points 3 months ago

Band-aid on a bullet wound. Thanks neoliberals!

[-] Sgt_choke_n_stroke@lemmy.world 6 points 3 months ago

If no tax on tips gets passed does adding 20% to the bill not apply anymore? Like I'm gonna start tipping 14% instead.

[-] leadore@lemmy.world 3 points 3 months ago

If anyone is going to exploit a "no tax on tips" law, it's going to be high-income lawyers and hedge fund/high finance people, and the IRS will lose vastly more tax revenue from them than what they'd lose from service workers' tips.

So while it may sound nice, it's just another avenue for exploitation by the rich and not a good idea, Think about it: it's Trump who brought up the idea (which ofc some advisor gave him since he doesn't do ideas), and who do you think they are trying to benefit? Not service workers, we can be sure of that.

If we could just get rid of stupid tipping culture and pay a living wage that doesn't depend on tips but is accounted for in the prices, then we could also not track and therefore not tax tips, since they'd rarely be given, and even if they are they'd be in smaller amounts than the usual 15-20% or whatever, since the customer is not feeling a burden of providing their living but just wants to add a small monetary recognition for especially good service.

[-] Devdogg@lemmy.ml 3 points 3 months ago

Like I paid taxes on the money I made while bartending....

[-] TenderfootGungi@lemmy.world 3 points 3 months ago

It would reinforce it. Instead, do what several countries have done, and make tipping mostly non-existent.

[-] captainlezbian@lemmy.world 2 points 3 months ago

My stance comes down to either tipped workers are making enough to need to pay taxes or they aren’t. I see no reason to give a bartender a tax break yhat we wouldn’t give to a line cook or retail worker with the same take home pay.

[-] the_toast_is_gone@lemmy.world 0 points 3 months ago

The fact that this is now apparently a bipartisan effort means either it's a good idea or a terrible idea. I'm leaning towards "good."

[-] Volkditty@lemmy.world 29 points 3 months ago

I'm leaning towards horrible. If your tips are tax-free, I'm gonna cut your wages. What do you care? Go out there and make more tips! Shake that money maker, honey!

And why should waitresses and bar staff have all the luck? Doesn't everyone deserve tax-free tips? Tip your grocery cashier! Tip your nurse! Tip the guy at the bank who approves the loan you need to afford giving tips to everyone, as the weight of providing a living to everyone you interact with shifts away from the business owners and shareholders and onto your shoulders!

[-] the_toast_is_gone@lemmy.world -2 points 3 months ago* (last edited 3 months ago)

If a hospital in the US started paying their nurses the same minimum wage that a server gets, that hospital would suddenly be without nurses and it would be entirely the hospital's fault.

[-] Zaktor@sopuli.xyz 2 points 3 months ago* (last edited 3 months ago)

They won't drop them to $2.50/hr or whatever the ridiculousness currently is, they'll just not give them any raises or start them at $10k lower than the non-tipped hospital. And the nurses will do the math and decide is still works out for them because the tips make up for it. The end result being the business pays less for their employees and the customer pays more.

[-] the_toast_is_gone@lemmy.world -1 points 3 months ago

What makes you think people will go from tipping $10 on a $40-50 meal, to tipping, say, $100 on a $400-500 medical bill? Or $1,000 on a $4,000-5,000 one? Or even more? Do you think that insurance is going to cover tips for nurses? Do you think every nurse in a given hospital is going to stay there instead of getting a job somewhere else that doesn't expect them to take tips, especially when they realize that nobody is tipping them?

[-] Zaktor@sopuli.xyz 1 points 3 months ago

What makes you think they won't? How much is it worth you when you're feeling miserable to have a nurse that checks on you every 10 minutes instead of every hour? How much gratitude do you have for personal attention when you need help rather than just carrying food to a table?

And like all places that transition to tips, they probably won't just say "we take tips now, -$10k", they'll first add it as an option for "an extra thank you" that then becomes factored into the salaries they offer to new nurses and the raises they give to existing employees.

[-] the_toast_is_gone@lemmy.world 0 points 3 months ago

See, there's a crucial difference in the two professions. A server is someone who brings your food, takes your check, and generally doesn't do much else. A nurse, on the other hand, needs to balance the life-saving care of dozens of patients at once while dealing with administrative bullcrap the whole time. People tip servers well to incentivize them to spend less time on their phones and dropping plates, and more time carrying food and recording orders accurately. You can't do that with nurses because they can't possibly give any more of their time. 91% of nurses experienced high levels of burnout in 2023,, and I'm dead certain that a lot of that is the insane workload. Twelve hour shifts working with uncaring staff and pissed-off patients must be soul-crushing. Then for your employer to try and disguise your looming pay cuts as "a way to give your healthcare heroes a special thank you" would probably cause an exodus from the profession; people can see through that stuff pretty easily.

You're still assuming this is going to be an immediate industry-wide thing, too. Like I said, people will see through the corporate bs, and they'll learn at some point that they can go to another hospital, not be expected to beg for tips from their suffering patients, and get paid more than the place that was lowballing them. Word of mouth is powerful. There's an entire cottage industry of Canadian nurses who cross the border into America for work because they're so dissatisfied with the Canadian system. Your scenario only works in a setting where there is only one nationwide hospital system that decides the market rate for nursing, and that people wouldn't decide not to become nurses after seeing that they're expected to tip them. We already see a nursing shortage because they're being treated so poorly; trying to make it a tipped industry would only make it worse.

As for the "would you?" thing, I can speak from a degree of personal experience here. I was in the psych ward in May and I was waiting for over ten hours in there to see a psychiatrist. I was tired, hungry, bored, and scared of what might happen to me. I was in no way equipped to make financial decisions at that point, and I get the feeling that the medical field would consider taking tips from someone who was in such an emotionally frail state to be unethical at best. (Oh yeah, and they took away my wallet. Couldn't give them cash if I wanted to.) My insurance made the cost of going there "reasonable," (mostly because I wasn't actually admitted,) but if the hospital expected me to tip the staff there, it would be nonsensical. How would you determine what the tip should be based on? The pre-insurance amount? That's like $5,000 there if I'm lucky, and 20% of that is $1,000 on a bill I only paid like $275 for. One word: No. The post-insurance amount? That's $27.50. A pittance compared to how much time and effort went into taking care of me, including the time it took to become a nurse to begin with. Furthermore, I would be so removed from the process of sending the tip that by the time the money reached the nurse(s) who helped me, they would only know me as a name on a bill at best. And again, would insurance be willing to cover the cost of a tip?

[-] Maeve@kbin.earth 1 points 3 months ago

Servers work their backsides off. Firstly, those trays are backbreaking, then they fill condiments, wrap silver, if they're not finished with that by the time customers leave their tables, and they can't fill condiments while customers are at the table. Sweetener packets must all be turned the same way. Tables must be sanitized, windows cleaned, the floors swept or vacuumed or mopped, often sanitized. Who do you think cleans and sanitizes the bathrooms? Helps get the kitchen staff caught up?

[-] the_toast_is_gone@lemmy.world 0 points 3 months ago

They do, but the fact remains that you can't effectively incentivize people to work more for you personally when they're already soul-crushingly overworked doing things for everyone else in their rotation. Trying to get more out of nurses who are in the industry already would be trying to squeeze blood from a stone. Also, you don't go to college for several years to be a server. If people realize they're going to have to beg for tips from their patients, then that won't bode well for the profession.

Not sure Rick.
Why would anyone's wages won't be subject to taxation while others are?
How can we prevent executives from instating "executive tips" that are not taxable ?
Is this a true effort to not get the people in service positions to get full salary and benefits?

[-] Buffalox@lemmy.world 7 points 3 months ago* (last edited 3 months ago)

A tip is not a wage. Companies that give lower wages because workers are also tipped are scumbags.

[-] Fiivemacs@lemmy.ca -3 points 3 months ago

Whatever. I don't tip anyways.

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this post was submitted on 14 Aug 2024
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