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Wiz Imp

(8,697 posts)
2. As far as eliminating taxes on tips - it's not going to happen
Mon Jan 20, 2025, 10:09 AM
Jan 2025

But it makes sense people would favor it when it is presented in such simplistic terms. However, if people are informed of all the consequences of what Trump and MAGAs removal of taxes on tips would entail such as:

-Economic analysts point out that creating a new class of income totally exempt from taxation could create incentives for more tax avoidance. Wealthy individuals would be motivated to find ways to convert their existing income into “tips” to get a new tax break. This could be particularly easy for professions that are already paid bonuses by their employers or customers, like hedge fund managers or lawyers
-There would be a lot more workers that want tipped jobs. And so that's going to give employers the comfort and the ability to pay those workers less in wages than they otherwise would
- There is a default assumption that consumers are just going to pay tips at the same rate that they have always been paying. That's not likely to be the case. At some point consumers will likely get exhausted. You're essentially asking customers to pay higher prices, when they have already gone through a period of four years where they have rebelled against higher prices.
-More than a third of the lowest-wage workers already don't have to pay any federal income tax so this would have no impact on them
-many more too numerous to mention

People would not support it nearly as strongly when presented with all of these facts.

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