Both former President Trump and Vice President Harris have called for the elimination of taxes on tips. The idea is popular, but there are economic consequences.
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Presidential nominees Donald Trump and Kamala Harris both talked about plans to eliminate taxes on tips during recent campaign stops in Las Vegas. The strategy is meant to appeal to a key voting bloc in a swing state where the service industry employs more than a quarter of the workforce. For more on the actual economic impact it would have and how it’s being received by service workers, here’s KNPR’s Christopher Alvarez.
CHRISTOPHER ALVAREZ, BYLINE: In a mixed-use development in southwest Las Vegas, staff at the Spanish and Italian fusion restaurant Anima are preparing for their dinner rush. Bryan John is 36 and has been a food server in Las Vegas for nearly 12 years. John said tips are paramount to his livelihood, and he thinks no tax on tips would benefit him greatly.
BRYAN JOHN: I mean, tips are my livelihood, so you would keep more of your money – more money in your pocket. We’re not just servants, you know? It’s that we’re people, and we deserve a nice wage, so it’s great.
ALVAREZ: But economists aren’t so sure of the proposal’s value. They say the measure’s effect could be nonexistent to a large pool of tipped workers. A few miles north of Anima restaurant near the Las Vegas Strip, patrons at G.O.A.T Sports Bar play video slots and watch the Dodgers game. Thirty-seven-year-old manager and bartender Nick Valdovinos thinks no tax on tips could actually have a negative impact on service workers.
NICK VALDOVINOS: But at the end of the day, if you’re trying to buy a house or buy a car or buy anything that you need to show income, it kind of screws you on that side of it, too.
ALVAREZ: UNLV tax law professor Francine Lipman says Valdovinos has a point.
FRANCINE LIPMAN: Just by calling tips tips versus what they really are, which is earnings, compensation, wages, you can’t then exclude that from gross income. And it shouldn’t be taxed differently just because you call it something different.
ALVAREZ: Lipman thinks no tax on tips doesn’t address the real issue, which is hourly wages. She suggests raising the minimum wage not just in Nevada but throughout the nation. In some states, tipped workers may have a base salary as low as $2.13.
LIPMAN: But that goes to the heart of the issue. And that is they’re not receiving a living wage.
ALVAREZ: Still, the no tax on tips movement has some powerful allies in Nevada besides the candidates for president. The Culinary Union, which represents over 60,000 hospitality workers, has expressed its support for the bill, along with the state’s two U.S. senators. For NPR News, I’m Christopher Alvarez in Las Vegas.
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