In the heated U.S. presidential race, both Donald Trump and Kamala Harris have agreed on one thing: tips should not be taxed.
Trump introduced this idea at a rally in June, and Harris supported it recently, earning criticism from Trump’s camp for copying his proposal.
This issue is important for service workers like restaurant staff, bartenders, and taxi drivers who rely heavily on tips. Both candidates announced their support in Nevada, a key swing state with many service industry jobs.
Trump said he was inspired by a waitress who complained about her taxes. Republicans have included this idea in their platform and proposed several bills, with support from restaurant groups.
Democrats, including President Biden, also seem to back the plan.
The focus on tips comes as more transactions are done electronically, making it easier for the government to track tip income.
However, only about 3% of U.S. workers receive tips, and many of them earn so little they don’t pay federal income taxes.
Currently, workers must report tips over $20 a month, which are taxed to fund programs like Social Security.
Proposals to eliminate taxes on tips could cost over $100 billion in ten years, but the impact on the economy and fairness of this policy is debated.
Some believe it could unfairly shift the tax burden or benefit employers more than workers by not addressing the minimum wage issue.
This overview highlights the complexity of the debate around taxing tips and its potential effects on workers and businesses.
Credit: BBC
https://www.bbc.com/news/articles/clyn511dgnjo