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On July 02 2025 05:12 KwarK wrote:Show nested quote +On July 02 2025 05:06 Mohdoo wrote:On July 02 2025 05:02 KwarK wrote:
Tips should be taxed. It’s income for work done. It’s a bizarre carve out that will inevitably be exploited. I know its not your intention, but this feels similar to arguments people make against other entitlements, pointing to theoretical exploitation or abuse. I'm cool with it, even if it ends up exploited by some whatever % of people because it would absolutely help a ton of super poor people. How so? If you want to pass a tax cut helping poor people then give McDonald’s employees a carve out. This is just “I’m gonna pay you 20% less now but you can call it a tip so we’re good” except they don’t get any social security when they’re 67 now. This is codifying paying people under the table into tax law. Framing this as an attempt to help people save on their taxes is simply wrong.
I get what you're saying and I agree the broader implications of it as an idea are bad. I suppose my assumption is that a lot of people deeply struggling right now would get a few hundred extra bucks, and that is critical to an enormous number of people. But if my assumption isn't valid, I agree it is entirely a bad idea.
I'm basically saying "I don't care if its wildly messy and not ideal if some number of struggling people avoid eviction". But if its actually a net-negative to the people I am saying need some help, that of course changes my view.
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United States43673 Posts
It’s not a net negative to people currently getting tips but as a CPA I absolutely hate the arbitrary carve out and what it’s going to do.
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I can imagine it has a bunch of insanely stupid implications. But my experience growing up extremely poor as a kid and living among extremely poor people will always remind me how life changing $100 can be to some people. When people are suffering to such an extent, I have an easy time accepting trouble it causes for people who really are not suffering at all.
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On July 02 2025 05:06 Mohdoo wrote:Show nested quote +On July 02 2025 05:02 KwarK wrote:
Tips should be taxed. It’s income for work done. It’s a bizarre carve out that will inevitably be exploited. I know its not your intention, but this feels similar to arguments people make against other entitlements, pointing to theoretical exploitation or abuse. I'm cool with it, even if it ends up exploited by some whatever % of people because it would absolutely help a ton of super poor people.
Or we could just pay people decently instead of opening loopholes.
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On July 02 2025 05:23 Gahlo wrote:Show nested quote +On July 02 2025 05:06 Mohdoo wrote:On July 02 2025 05:02 KwarK wrote:
Tips should be taxed. It’s income for work done. It’s a bizarre carve out that will inevitably be exploited. I know its not your intention, but this feels similar to arguments people make against other entitlements, pointing to theoretical exploitation or abuse. I'm cool with it, even if it ends up exploited by some whatever % of people because it would absolutely help a ton of super poor people. Or we could just pay people decently instead of opening loopholes.
That already didn't happen. I am pointing out the benefits to what has already happened. Well, what appears poised to happen. Paying people decently is absolutely not about to happen.
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On July 02 2025 05:24 Mohdoo wrote:Show nested quote +On July 02 2025 05:23 Gahlo wrote:On July 02 2025 05:06 Mohdoo wrote:On July 02 2025 05:02 KwarK wrote:
Tips should be taxed. It’s income for work done. It’s a bizarre carve out that will inevitably be exploited. I know its not your intention, but this feels similar to arguments people make against other entitlements, pointing to theoretical exploitation or abuse. I'm cool with it, even if it ends up exploited by some whatever % of people because it would absolutely help a ton of super poor people. Or we could just pay people decently instead of opening loopholes. That already didn't happen. I am pointing out the benefits to what has already happened. Well, what appears poised to happen. Paying people decently is absolutely not about to happen.
Every other country manages to pay people working in restaurants and bars reasonably well, so they don't rely on tips for income.
The whole US setup is just incredibly weird. You basically don't pay them, and then have them beg the customers for payment (but kinda sneakily, else the customers don't like it).
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How many people claimed their tips to begin with? Maybe it just saving the IRS some cost of enforcement but I bet they are saving almost no one any tax dollars. Sounds like a publicity stunt when the real cut went to the rich and the pretend one to the poor.
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On July 02 2025 05:29 Simberto wrote:Show nested quote +On July 02 2025 05:24 Mohdoo wrote:On July 02 2025 05:23 Gahlo wrote:On July 02 2025 05:06 Mohdoo wrote:On July 02 2025 05:02 KwarK wrote:
Tips should be taxed. It’s income for work done. It’s a bizarre carve out that will inevitably be exploited. I know its not your intention, but this feels similar to arguments people make against other entitlements, pointing to theoretical exploitation or abuse. I'm cool with it, even if it ends up exploited by some whatever % of people because it would absolutely help a ton of super poor people. Or we could just pay people decently instead of opening loopholes. That already didn't happen. I am pointing out the benefits to what has already happened. Well, what appears poised to happen. Paying people decently is absolutely not about to happen. Every other country manages to pay people working in restaurants and bars reasonably well, so they don't rely on tips for income. The whole US setup is just incredibly weird. You basically don't pay them, and then have them beg the customers for payment (but kinda sneakily, else the customers don't like it).
I agree completely. By no means am I saying "No tax on tips is better than paying people a good wage". I am saying "Well, this piece of shit bill has this one small thing that is a net-positive to some of the poorest americans, so I'm happy about that".
Tipping itself is distasteful and cringe. But this change would also have a profound impact on many deeply struggling people's lives. So I'm looking on the bright side where I see it, because its not like the bill is also considering better options. Its just this.
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United States43673 Posts
On July 02 2025 05:33 Billyboy wrote:
How many people claimed their tips to begin with? Maybe it just saving the IRS some cost of enforcement but I bet they are saving almost no one any tax dollars. Sounds like a publicity stunt when the real cut went to the rich and the pretend one to the poor.
Tips are mostly paid by card.
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On July 02 2025 05:34 KwarK wrote:Show nested quote +On July 02 2025 05:33 Billyboy wrote:
How many people claimed their tips to begin with? Maybe it just saving the IRS some cost of enforcement but I bet they are saving almost no one any tax dollars. Sounds like a publicity stunt when the real cut went to the rich and the pretend one to the poor. Tips are mostly paid by card.
Oh yeah, I forget where we are now. Back in my day... getting old is the worst.
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United States43673 Posts
On July 02 2025 05:29 Simberto wrote:Show nested quote +On July 02 2025 05:24 Mohdoo wrote:On July 02 2025 05:23 Gahlo wrote:On July 02 2025 05:06 Mohdoo wrote:On July 02 2025 05:02 KwarK wrote:
Tips should be taxed. It’s income for work done. It’s a bizarre carve out that will inevitably be exploited. I know its not your intention, but this feels similar to arguments people make against other entitlements, pointing to theoretical exploitation or abuse. I'm cool with it, even if it ends up exploited by some whatever % of people because it would absolutely help a ton of super poor people. Or we could just pay people decently instead of opening loopholes. That already didn't happen. I am pointing out the benefits to what has already happened. Well, what appears poised to happen. Paying people decently is absolutely not about to happen. Every other country manages to pay people working in restaurants and bars reasonably well, so they don't rely on tips for income. The whole US setup is just incredibly weird. You basically don't pay them, and then have them beg the customers for payment (but kinda sneakily, else the customers don't like it).
This actually entrenches it a lot more. Let's say your server needs $100/night to live. You can incorporate $150 into food costs to customers, collect $150 from customers, pay them $150 and after payroll taxes and income taxes etc. they'll get $100. Or the customers can just pass them $150 directly.
It's effectively a subsidy paid by all other taxpayers to servers. They get a special tax refund at the cost of general tax revenue as long as they continue to be paid by tips. So all the businesses that previously paid a living wage to their servers are somewhat getting fucked now and their servers will demand not to be paid a living wage but to instead have a mandatory service charge added to the bill in order to get that sweet tax refund.
Of course the simplest thing that you and I can do is simply tip less. We pay taxes on our income and yet we're supposed to tip them the full amount even though they don't? Nah. Now we add a step. 20% of the bill to calculate their gross income, guess their marginal tax bracket, then multiply by 1 minus their marginal to calculate what you want them to net. That's the new tip.
That method essentially lets you move part of the cost of going to restaurants directly to the US national debt. So instead of the waitress getting a saving on her taxes you get a saving on the cost of eating out by putting it on Uncle Sam's credit card.
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What is the math on who all makes more and less on the consumer just paying 15% no tip.
edit: the servers being paid the difference.
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On July 02 2025 05:42 KwarK wrote:Show nested quote +On July 02 2025 05:29 Simberto wrote:On July 02 2025 05:24 Mohdoo wrote:On July 02 2025 05:23 Gahlo wrote:On July 02 2025 05:06 Mohdoo wrote:On July 02 2025 05:02 KwarK wrote:
Tips should be taxed. It’s income for work done. It’s a bizarre carve out that will inevitably be exploited. I know its not your intention, but this feels similar to arguments people make against other entitlements, pointing to theoretical exploitation or abuse. I'm cool with it, even if it ends up exploited by some whatever % of people because it would absolutely help a ton of super poor people. Or we could just pay people decently instead of opening loopholes. That already didn't happen. I am pointing out the benefits to what has already happened. Well, what appears poised to happen. Paying people decently is absolutely not about to happen. Every other country manages to pay people working in restaurants and bars reasonably well, so they don't rely on tips for income. The whole US setup is just incredibly weird. You basically don't pay them, and then have them beg the customers for payment (but kinda sneakily, else the customers don't like it). This actually entrenches it a lot more. Let's say your server needs $100/night to live. You can incorporate $150 into food costs to customers, collect $150 from customers, pay them $150 and after payroll taxes and income taxes etc. they'll get $100. Or the customers can just pass them $150 directly. It's effectively a subsidy paid by all other taxpayers to servers. They get a special tax refund at the cost of general tax revenue as long as they continue to be paid by tips. So all the businesses that previously paid a living wage to their servers are somewhat getting fucked now and their servers will demand not to be paid a living wage but to instead have a mandatory service charge added to the bill in order to get that sweet tax refund. Of course the simplest thing that you and I can do is simply tip less. We pay taxes on our income and yet we're supposed to tip them the full amount even though they don't? Nah. Now we add a step. 20% of the bill to calculate their gross income, guess their marginal tax bracket, then multiply by 1 minus their marginal to calculate what you want them to net. That's the new tip.
This sounds so close to waiters becoming independent contractors and billing the restaurant, while having to deal with EI and everything themselves, but in a less clear and obvious way and fewer guarantees. Great!
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Agree with Kwark. It's an incredibly stupid idea. Tipping culture is already out of control here and now we're creating perverse incentives to make it worse.
To give some reference to the Europeans here that might not know how ridiculous this is getting, here is a picture someone took from a bookstore in my neck of the woods
https://www.reddit.com/r/bayarea/comments/1f6n6dp/at_keplers_bookstore_in_menlo_park_you_have_to/
Not a restaurant. Not a bar. But a bookstore tacking on surcharges for their employees' wages. Imagine we magically have a lot more "tipped workers" if this goes into effect.
there was actually a law in California to ban these type of bullshit hidden surcharges from restaurants but in the 11th hour the restaurant lobby got the politicians to cave. But it still went through for airbnb/hotels that hide bullshit resort fees and cleaning fees so I guess that's something.
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I don't know much about the US tax system, but rather than carving out an exception for tips, wouldn't it be easier and more equitable to just raise the tax exempt income by a few hundred dollars for everyone?
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On July 02 2025 05:53 BlackJack wrote:Agree with Kwark. It's an incredibly stupid idea. Tipping culture is already out of control here and now we're creating perverse incentives to make it worse. To give some reference to the Europeans here that might not know how ridiculous this is getting, here is a picture someone took from a bookstore in my neck of the woods https://www.reddit.com/r/bayarea/comments/1f6n6dp/at_keplers_bookstore_in_menlo_park_you_have_to/Not a restaurant. Not a bar. But a bookstore tacking on surcharges for their employees' wages. Imagine we magically have a lot more "tipped workers" if this goes into effect. there was actually a law in California to ban these type of bullshit hidden surcharges from restaurants but in the 11th hour the restaurant lobby got the politicians to cave. But it still went through for airbnb/hotels that hide bullshit resort fees and cleaning fees so I guess that's something.
I once used a vending machine that included a tipping prompt. Its only happened once. But I felt like I was on some prank TV show or something. Could not believe it. Tipping is definitely heinous and terrible. Hopefully some day its gone for good.
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I think this is the biggest issue surrounding tips, much more important than not taxing them. Servers need to be paid at least a reasonable minimum wage + tips, or a comfortable enough hourly wage that tips aren't even part of our culture anymore (just like in most other wealthy countries).
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United States43673 Posts
On July 02 2025 05:53 BlackJack wrote:Agree with Kwark. It's an incredibly stupid idea. Tipping culture is already out of control here and now we're creating perverse incentives to make it worse. To give some reference to the Europeans here that might not know how ridiculous this is getting, here is a picture someone took from a bookstore in my neck of the woods https://www.reddit.com/r/bayarea/comments/1f6n6dp/at_keplers_bookstore_in_menlo_park_you_have_to/Not a restaurant. Not a bar. But a bookstore tacking on surcharges for their employees' wages. Imagine we magically have a lot more "tipped workers" if this goes into effect. there was actually a law in California to ban these type of bullshit hidden surcharges from restaurants but in the 11th hour the restaurant lobby got the politicians to cave. But it still went through for airbnb/hotels that hide bullshit resort fees and cleaning fees so I guess that's something.
How very farsighted of them. Make it like 30% and pay them $2/hr base wage. Pay your employees straight out of the national debt.
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On July 02 2025 05:53 BlackJack wrote:Agree with Kwark. It's an incredibly stupid idea. Tipping culture is already out of control here and now we're creating perverse incentives to make it worse. To give some reference to the Europeans here that might not know how ridiculous this is getting, here is a picture someone took from a bookstore in my neck of the woods https://www.reddit.com/r/bayarea/comments/1f6n6dp/at_keplers_bookstore_in_menlo_park_you_have_to/Not a restaurant. Not a bar. But a bookstore tacking on surcharges for their employees' wages. Imagine we magically have a lot more "tipped workers" if this goes into effect. there was actually a law in California to ban these type of bullshit hidden surcharges from restaurants but in the 11th hour the restaurant lobby got the politicians to cave. But it still went through for airbnb/hotels that hide bullshit resort fees and cleaning fees so I guess that's something.
Wow. An opt-out tip at a bookstore. That is indeed silly.
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