Convicted Felon Proposes Ending Taxes on Tips

On Sunday at Nevada’s cult meeting, convicted felon Trump promised the crowd he would eliminate taxes on tipped wages “right away” if he is re-elected in November. Many Las Vegas casino and entertainment workers depend on tips for income.

“For those hotel workers and people that get tips, you’re going to be very happy. Because when I get to office, we are going to not charge taxes on tips,” Trump said during a rally in Las Vegas.

***Of course, any change to the taxation of tipped income would require an act of Congress.

Tips through electronic means, like credit card payments, are automatically reported to employers, and employees are also expected to total the amount of their cash tips and self-report them on individual income tax returns.  The IRS estimates that it gets 99% of what it’s due on regular wages, but only 55% of what it’s owed on tips.

  • Tips are crucial for many service workers. The federal government and many states allow employers to pay tipped workers well below the normal minimum wage, as long as they ensure each worker earns at least the standard federal minimum wage of $7.25 an hour.
  • Nevada plans to institute a uniform minimum wage of $12 per hour for all employees, tipped or not, by July 1. But in many other states, such as Texas, North Carolina, and Utah, tipped workers are legally allowed to be paid as little as $2.13 per hour, as long as the salary and the tips they make ultimately equal or exceed the minimum wage requirement. 

What else is convicted felon Trump promising?

Convicted felon Trump has also pledged to make permanent the Republican-passed individual tax cuts that he signed into law in 2017, but which expire at the end of 2025. Tax experts estimate that doing so would raise U.S. deficits by some $4 trillion over a decade compared to current forecasts.

So the 2017 Trump tax cuts not only helped to funnel wealth to the top, new tipping regulations were passed by the Trump administration in December 2017.

Trump’s Labor Department had proposed rules that would have allowed employers to control all worker tips, but an uproar caused a compromise, including a new rule that would prohibit employers from keeping tips earned by workers and sharing them with managers and supervisors. Instead, owners were given the flexibility to share tips with employees who don’t traditionally receive them, including line cooks, dishwashers and other back-of-the-house workers who typically earn less than servers.

The Trump administration also eliminated the “80/20” rule, which stated that employees could spend as much as 20 percent of their time performing non-tipped tasks but still get paid the tipped minimum wage for their entire shift.

Worker advocates were less impressed, and said the new regulations replaced clear-cut guidelines with vague ones, such as allowing employers to have waiters and waitresses perform “related, non-tipped duties” for a “reasonable time.”

Owners could require tipped workers to assume duties once done by cleaning crews, dishwashers or prep cooks, all of whom receive a full minimum wage. Those duties might include mopping floors, cleaning bathrooms, preparing salads, taking reservations and preparing dining rooms for large parties.

USA Today, Forbes, WaPo