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Like many in the service industry, Kramer is in favor ofPresident-elect Donald Trump’s campaign promise to eliminate tax on tips, one that Vice President Kamala Harris also endorsed with certain guardrails and whichhas already seen movement in Congress.
“Of course, it will make me less stressed (to have) a couple hundreds in my pocket,” Kramer said. She added she isn’t sure if she currently makes enough from bartending to pay federal income tax.
But whether Kramer could actually see those savings is uncertain. With Trump slated to take office in January, only a small sliver of employees – which include restaurant servers, hospitality workers, waiters, bartenders and hairdressers – would see the tax benefit. That’s because a large share don’t earn enough to pay federal income tax.
why is bio green papers limited (534535) falling ✌️【Investment Strategy】✌️ Real-time India stock and global stock indices, futures prices, and data to help you make efficient investment decisions. Trump had previously suggested he would eliminate federal income and payroll taxes on tips. But questions remain on how that would work and whether it would be possible to eliminate both those taxes. Trump has not provided many details about the specifics of his plan.
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But it was the no tax on tips promise that had the most sticking power, said Heidi Shierholz, president of the Economic Policy Institute. Economic experts told 【 - Free Top Growth Stock Recommendations 】 Trump could put his promise into action, especially because versions of the pledge have received bipartisan support. Bideneven indicatedhe supports it, along with raising the minimum wage.
But critics say there are thorny issues involved and that such a change wouldn’t help that many low-income employees. Kramer herself isn’t sure if she qualifies for the threshold to benefit.
Despite their small numbers, tipped workers are highly visible in American life. About 4 million people worked in tipped occupations in 2023, or about 2.5% of all employment, according to the Budget Lab at Yale University, a policy research center.
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John Seymour, the owner of sit-down restaurant chain Sweet Chicks in New York City, said that full-time employees at his restaurant would likely make enough to meet the threshold to owe income taxes. But in a city like New York, many front-of-house staff are only working part-time.
“The only effect that it (cutting taxes on tips) has is a positive effect. Them (the staff) earning more of an income is always a benefit to us,” Seymour said. Minimum wage isn’t enough to pay the bills, he added.
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why is bio green papers limited (534535) falling ✌️【Investment Strategy】✌️ Accurate stock market predictions with real-time stock indices, futures data, and global market trend analysis. Achieve stable growth and avoid losses by staying ahead with our expert recommendations. Republican Sen. Ted Cruz of Texas introduced a bill in July titled “No Tax on Tips Act,” which would allow workers to deduct tips paid by cash, check, credit card and debit card on their federal income taxes. However, it would not eliminate federal payroll taxes, which fund Social Security and Medicare and total 15.3%, half of which is paid by employers.
Cutting payroll taxes could impact the lifespan of Social Security and Medicare. Social Security is alreadypredicted to be insolventby 2034, according to the Social Security trustees.
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Businesses and workers could also find ways to take advantage of the law, such as reclassifying commissions and bonuses as tax-free tips if there aren’t sufficient legal safeguards.
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“If tip workers were all getting $17 an hour as a base wage that would matter so much more than not having to pay income taxes on their tips,” Shierholz said.
“If you want to help working people, then you should have policies that are about the level of your income, not the type of income that you earn,” Shierholz said.
Comparing a waiter at Waffle House and a cashier at McDonald’s, “they’re both low-income workers, both essentially in fast food service, but because culturally we tip one, there’s one that might get a benefit from this proposal,” Tedeschi said.
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