In Nevada, Trump Proposes Ending Taxation of Tips

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Campaigning in a state powered by the service industry, Donald Trump said on Sunday that his administration would eliminate taxes on tipped income as a “first thing” if he is reelected.

“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.

Any change to the taxation of tipped income would require an act of Congress. When asked for more detail on the policy change, a spokeswoman said: “President Trump will ask Congress to eliminate taxes on tips.”

Lawmakers will have a chance to rewrite the country’s tax policy in 2025, when much of Trump’s 2017 tax cut package expires. Tipped wages weren’t addressed in the original legislation, but Congress could include them in any overhaul or extension it attempts next year.

The campaign of President Biden – who has called for increasing the minimum wage and eliminating the tipped minimum wage – did not immediately respond to a request for comment on Trump’s proposed tax change.

Under current law, all gratuities that workers receive must be taxed at the same rate as their regular income, and many employers report their workers’ tips to the IRS – but much is paid in cash and never reported to the IRS. More than 6 million workers had tips reported to the IRS in 2018, the most recent year for which complete IRS data is available.

Trump’s proposal could appeal to the many service workers and Latino voters who help power Nevada’s economy, especially its dominant hospitality industry. He has been attempting to broaden his appeals to Latino voters, who make up about 20 percent of the electorate in Nevada – arguing that they would economically benefit more from his policies than Biden’s.

Ted Pappageorge, secretary-treasurer for the Culinary Workers Union Local 226 – which is closely allied with the Biden campaign – noted that the Culinary Union has “fought for tipped workers’ rights and against unfair taxation” for decades.

“Relief is definitely needed for tip earners, but Nevada workers are smart enough to know the difference between real solutions and wild campaign promises from a convicted felon,” Pappageorge said in a statement.

Tips are crucial for many of these workers. The federal government and many states allow employers to pay tipped workers well below the normal minimum wage, provided they make up the difference to ensure each worker earns at least the standard federal minimum wage of $7.25 an hour.

The IRS considers cash and noncash tips as income subject to federal income taxes, as well as Social Security and Medicare taxes. In 2018, the latest year for which complete IRS data is available, the average worker who had tips reported on their W-2 had $6,249 in tips that were taxed.

“You do a great job of service. You take care of people. And I think it’s going to be something that really is deserved,” Trump said at the rally. “So those people that have jobs in restaurants, whatever the job may be, a tipping job we’re not going after for taxes anymore.”

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Mariana Alfaro contributed to this report.

(c) Washington Post


2 COMMENTS

  1. He also said all Income Tax will be abolished because TAXATION ON YOUR INCOME you worked hard for IS THEFT. There will however be about a 14% tax on consumer goods, excluding food and medication and necessary items.

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