They don't. This is purely a PR stunt. The Economics Policy Institute details a few things this would do:
Basically, imagine if Musk said "I am paying myself $1 salary and taking a $400 billion tip". No taxes.
- help very few workers and undermine pay increases for many more
- expand the use of tipped work—a system rife with discrimination and worker abuse — potentially leading to consumers being asked to tip on virtually every purchase
- deplete state and federal budgets and create new avenues of tax avoidance, especially for high earners
"Didn't Harris propose the same?"
For restricted industries, yes, meaning she wouldn't be handing CEOs large bags of money. But she and Trump made the same mistake: thinking waitresses living on tips pay much income tax in the first place.
Or I could quote this article.Of the more than 2 million food servers across the country, half earn less than $37,000 a year, according to the Bureau of Labor and Statistics. Those workers can largely claim the standard deduction, reducing their tax burden, Crandall-Hollick said. But they also likely can claim other forms of tax relief, such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).
More than a third of tipped workers didn’t make enough money to pay federal income taxes last year, Yale Budget Lab found, even before tax credits like the EITC or the CTC.
“You can’t go negative with taxable income. Exempting any more income from taxation is not going to help those individuals,” Crandall-Hollick said.
Or I could quote this article.
Or I could quote this article.
Or I could quote this article, which says that it would cost the federal government $10 billion a year.
"Wait, isn't $10 billion dollars divided by 2 million food servers like $5,000 each? That's huge! Someone earning nearly nothing could really use that $5,000!"
It is, but that's not what would happen. Remember how I cited taxes couldn't go negative? They wouldn't get much of anything. Also, other people get tipped, the total is closer to 4 million. The highest deduction would be $1700, which again, would go to the highest-end of tipped recipients, not the average waitress, who would get $200...
...until you read the bill currently working its way through the pipes. The above figures? $10 billion total, $1700 at most? That's working on the campaign promises in their vague terms, "no tax". The current bill says no income tax. It leaves payroll taxes alone. Which, yep, you pay even at low incomes. That $200 becomes zero in a hurry when you yoink that out.
And uh...(coughs)...if your customer hands you cash directly, how much of that do you really tell the IRS about? I'm not saying every single tipped worker lies about their cash tips. I am saying, those who do, pay no taxes on that part of their income already.
"Wouldn't that inspire them to be honest?"
Not if they pay payroll taxes on it, no, "zero tax" is lower than "less taxes". They won't be helped at all.
Neither Trump's nor Harris' vaguely-worded campaign promises would have helped much, and the current bill makes things worse. If people actually cared about low-income workers who rely on tips for a living wage, they'd propose a higher minimum wage. Democrats have. Republicans haven't.
When I was a server for the better part of a decade, I made $2.14 per hour. That covered my taxes. Tips was my money at the end of the month. On a rare occasion, I would receive upwards of $30 in my paycheck.
Removing taxes from tips just means that the owner of the restaurant no longer would need to pay me the $2.14 per hour.
The only person who gains anything out of this is the business owner, not the servers.
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At the time that I was a server, it was 8% of cash tips were claimed. Directed by the manager.
RIP Genn Greymane, Permabanned on 8.22.18
Your name will carry on through generations, and will never be forgotten.
Speaking of not paying people, the House bill pairs nicely with the downgrade of the US credit rating and subsequent spike of bond yields. Trump is personally trying to dramatically increase the deficit, and it'll be harder to borrow the money to pay for it. Because of Trump, people are afraid the US won't pay them.
Removing tax on tips is literally just making income non taxable. Its such a weird and populist policy to have. Very specific. Tips are income it makes a decent part of the income of waiters. The government no taxing it is just a subsidy to that. But whatever, republicans dont care about anything
Yes, it has one intended consequence (a big splashy PLEASE LOVE ME headline that does nothing) and a big unintended one (everyone starts earning tips instead of wages, @Mayhem is right)
From Europe we look at the US tip culture and go "OR YOU COULD PAY PEOPLE THE CORRECT WAGE"
Tips are supposed to be a little extra when a server or restaurant does an extra ordinary job or - if we are talking about small tips - just rounding up that 43.50 to a 45.
I don't know how the US progressive tax system works, but usually those start from a tax free sum. Just up that one if you want to lower taxes for lower incomes or lower the percentage on the lowest taxable bracket or something, you know, like normal governments do. This tip system is way to easy to abuse, but I guess "Increasing the tax free sum" isn't an easy slogan to tweet.

So we're investigating Drump for using Hulk Hogan, Kid Rock and Dana White yes? Hypocrites gonna hypocrite.
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The american tip system only exists to make menu prices look cheaper, that's it.
If it was eliminated tomorrow and they had to pay the servers a living wage it's not coming out of the owners wallet it's still coming out of the customers. Menu prices just raise to account for paying the standard 20% gratuity.
So not taxing tips is just stupid, it's literally their salary but coming from a roundabout way so owners can make their menu prices look cheaper than they actually are. Some servers at high end places are easily making 6 figures and they don't have to pay taxes? Just some arbitrary ruling Drump used to farm extra votes.
Last edited by Tech614; 2025-05-19 at 03:35 PM.
how very normal and not unhinged and totally manly and not a delicate crybaby snowflake conspiracy theorist who is the head of the republican party, free from criticism from said party, and also has the codes to launch nuclear missiles
totally normal stuff that people say in public without anyone raising an eyebrow or thinking they're a fucking weirdo who should be avoided because they don't appear to be mentally stable
republicans are weird, yo
They're going to normalize tipping (bribing) government employees so this is just a prelude to making it so the recipients of those tips don't have to declare them on their taxes and there's less of a paper trail on them. I guarantee it.
This new standard needs to die in a roaring fire.
15% was the standard, and it will always be from me. Percentage based payments increase with inflation. This 20% nonsense is purely a raise funded by the customer. As the menu or item cost increases due to inflation, so does their total tip amount as it is percentage based.
I have no idea how people got conned into agreeing with this increase, but I for one will not abide.
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Our lil bistro at my office building has a Tip screen on their self check out. Each of the employees are making well over the minimum wage. NO TIP!
RIP Genn Greymane, Permabanned on 8.22.18
Your name will carry on through generations, and will never be forgotten.
100% agreed.
The cooks also put out two tip jars. They are paired with a fun A or B discussion question.
Place a dollar in jar A for _____ and a dollar in jar B for ______. So on top of tipping at the touch screen, you can tip even more at the counter! And yes, people often fill the jars.
'Murica.
RIP Genn Greymane, Permabanned on 8.22.18
Your name will carry on through generations, and will never be forgotten.

Eh, I'm pretty damn old and been tipping 20% my whole life. Not that I have anything against people that do 15%, I just do not think it's some new thing and it's probably more of a regional thing with people who did/do 15%.
In the end no matter what % the standard tip is, it's still just a hidden fee to sell things at a cheaper price than they should be. The system has always been about misleading the consumer.
Last edited by Tech614; 2025-05-19 at 05:19 PM.

I honestly think this is what is happening in stores. Their point of service software comes with it baked in. Likely a leading provider is being used across a large number of businesses, and they are taking the default install package which includes the tip screen. Why turn it off if there will be people stupid enough to make a selection that gets them a couple extra bucks?
RIP Genn Greymane, Permabanned on 8.22.18
Your name will carry on through generations, and will never be forgotten.