Who says our politicians can’t agree on anything these days?
All 100 U.S. senators, comprised of Democrats and
Republicans, voted this week to unanimously approve “no tax on tips.”
The Senate’s decision to pass the measure was known as a “unanimous
consent request.” If a senator presents a bill or resolution and nobody
objects, it passes.
This process is often used for political posturing. One
party brings an idea that’s important to them, beating the other party to object.
That way, during election time, the party can say, “My opponent voted against
this.”
Unanimous consent is typically used for topics like increasing
investments in semiconductor manufacturing, cleaning oceans, cleaning lakes,
honoring soldiers killed in training missions overseas and congratulating
charter schools.
These topics also unanimously passed the Senate in the very
same session as “no tax on tips.”
“No tax on tips” has had bipartisan support from both
parties and the public. Lawmakers in both parties and employers believe such a
law will bring relief to the working class.
Both Republican President Donald Trump and Democratic
challenger Kamala Harris promoted it during their campaigns.
U.S. Sens. Ted Cruz, R-Texas; Cahterine Cortez Masto,
D-Nevada and Jacky Rosen, D-Nevada introduced the bill in the first place.
So, how
would the “no tax on tips” work?
It applies to tips
that workers report to employers. Those workers would be able to deduct up
to $25,000 in tipped income on their taxes. However, this is limited to workers
whose annual income is $160,000 or less in 2025. The Trump administration
would publish a list of qualifying occupations within 90 days of the bill’s
signing.
How many people would that realistically apply to? The
Budget Lab at Yale University found tipped workers made up 2.5% of employment
in 2023. That’s about 4 million people.
They didn’t break that down by annual income, so it’s safe
to assume fewer than 4-million people would benefit from the measure taking
effect.
However, if more workers can write off tips on their taxes,
then more workers might start taking tips.
The problem is many people think tipping culture is already
getting out of control.
A 2024 survey from BankRate found:
– 59% of Americans have a negative view of tipping
– 34% said they’re annoyed by tip screens
encountered at coffee shops, food trucks and elsewhere
– 14% said they’d rather pay higher prices and get
rid of tipping entirely
