Servers praise ‘No Tax on Tips’ Act passed by Senate, but not everyone's happy: ‘This is bad policy’
The Senate passed the 'No Tax on Tips' bill, allowing workers to deduct 100% of reported tips from federal taxes. Critics argue it benefits only servers.
A large section of the internet has expressed doubts about the ‘No Tax on Tips’ bill passed by the Senate on Tuesday. The bill, passed with unanimous consent, will eliminate federal taxes on tips, reported The Hill.
The bill allows workers to deduct 100% of their reported tips, including those received in cash, by credit or debit card, or by check, from their federal income taxes.
“‘No Tax On Tips’ was one of President Trump’s key promises to the American people, which he unveiled in my state of Nevada," said Democrat Jacky Rosen, who brought the bill to the floor. ”And, I am not afraid to embrace a good idea, wherever it comes from."
“Nevadans, our families, are being squeezed, and we need real relief,” Rosen said. “For some, many service and hospitality workers, tips aren’t extra, it’s part of their income that they use to make ends meet.”
Tipping culture in the US
Tipping in the US is notably more entrenched and generous than in much of the world, often forming a significant part of service workers’ income, particularly in restaurants where tips of 15–25% are customary and expected.
In contrast, many other countries either include service charges in the bill or tip more modestly, if at all, as service staff are typically paid higher base wages.
Under federal law, employers can pay tipped workers as little as $2.13 per hour – far below the standard federal minimum wage of $7.25 per hour - as long as the worker’s tips make up the difference.
Critics on forums like ‘End Tipping’ on Reddit argue that tipping in the US feels more like a social obligation than a token of appreciation, and that servers should be paid minimum wage like other industries.
No Tax on Tips meets backlash
While some welcomed the concept of not paying taxes on tips, the bill reignited the debate around living wage vs tips.
A large section of the internet expressed discontent with the Act, pointing out several ways in which it could be misused.
“Seems like this would make it easier for these folks to ‘tip’ their friends and launder money,” read one comment on Reddit.
“Why can't they just pass a law to make an actual living wage, instead of jumping through these bulls*** hoops,” another asked. “The government will do anything except actually fix a problem.”
Many saw it as a move that would unfairly benefit the server community.
“I don't get the support for this by anyone other than servers. I mean from their standpoint, sure, who doesn't want tax-free income? But the rest of us would like the majority portion of our income to be tax-free too! Tax relief programs should be designed so that they help everyone, not just one individual group of people,” a Reddit user added.
“Why is the government favoring some workers over others? Now the rest of us get to subsidize tax cuts for tipped workers when the rest of us are getting hosed. This is bad policy,” commented a person on the Politics subreddit, where the bill has been widely discussed and dissected.
