In a rare display of bipartisan agreement, Vice President Kamala Harris has endorsed eliminating taxes on tips for hospitality and service workers, echoing a tax proposal originally put forward by former President Donald Trump just months ago.
The announcement came during a campaign rally in Las Vegas on Saturday. Harris and running mate, Minnesota Governor Tim Walz addressed a crowd of thousands, including members of Nevada’s influential culinary workers union.
“It is my promise to everyone here when I am president, we will continue our fighting for working families of America, including to raise the minimum wage and eliminate taxes on tips for service and hospitality workers,” Harris said to the crowd.
The vice president’s support for this policy marks a significant moment in her campaign, as it represents one of the first notable economic proposals she has offered since ascending to the top of the Democratic ticket last month.
Speaking to reporters in Arizona, Harris said she plans to roll out her economic policy platform next week, noting that it will be focused on “what we need to do to bring down costs and also strengthen the economy.”
Newsweek contacted Harris’ campaign via email on Saturday for additional comment.
Andrew Harnick and Tom WIlliams/ASSOCIATED PRESS
Trump initially proposed the idea of tax-free tips during a campaign rally in Las Vegas in June, aiming to appeal to the state’s substantial hospitality workforce. “To those hotel workers and people who get tips, you are going to be very happy, because when I get to office we are not going to charge taxes on tips, people making tips,” Trump stated. “We’re going to do that right away, first thing in office.”
The proposal has garnered significant public support, according to a recent poll conducted by Redfield & Wilton Strategies for Newsweek. The survey, conducted on July 29 among 1,750 eligible voters in the U.S., found that 67 percent of Americans do not believe tips given to service workers should be taxed, while only 19 percent believe they should be.
Support for the policy crosses party lines, with 68 percent of Republicans and 65 percent of Democrats in favor of abolishing taxes on tips.
Despite its popularity, the economic implications of such a policy are complex. The nonpartisan Committee for a Responsible Federal Budget estimates that exempting all tipped income from federal income and payroll taxes could reduce federal revenues by $150 billion to $250 billion over 10 years on a static basis. The committee warns that the revenue loss could be significantly higher once behavioral effects are incorporated.
Howard Gleckman, senior fellow at the nonpartisan Urban-Brookings Tax Policy Center, previously raised concerns about the potential impacts of the proposal. “Tax-free tips might help a relatively small number of waiters at high-end restaurants,” he noted.
The political landscape in Nevada, a key battleground state, adds another layer of complexity to this issue. In 2020, Biden narrowly beat Trump by 2.4 percentage points in the state. Now, both Harris and Trump are vying for support from the sizable coalition of service industry workers in the state known for its tourism.
The day before Harris’ rally, the Culinary Workers Union Local 226, which represents 60,000 workers in the hotel, restaurant, and entertainment industry, announced its endorsement of Harris according to the Associated Press. “The path to victory runs through Nevada,” the union stated, “and the Culinary Union will deliver Nevada for President Kamala Harris and Vice President Tim Walz.”
However, the union reportedly previously pushed back on Trump’s promise when he first proposed it in June. As the campaign intensifies, both Harris and Trump are expected to make frequent visits to Nevada, recognizing its potential as a swing state in the upcoming election.