Here’s a tip: eliminate US tipping culture and pay people a living wage
I’m here in Las Vegas for a conference where I just paid $7 for a cup of coffee and then was shamed into tipping another $1 to the server for pouring the coffee and handing it to me.Welcome to America.I feel like I’m tipping for everything, everywhere.And now it’s only going to get worse.And for that I blame President Trump.
Of course, our tipping culture was in place long before Trump took office,But now that his “no tax on tips” promise became law, our government is officially enabling it,That’s good news for tipped workers and for small-business owners who may feel less pressure to pay higher wages if their workers are getting enough gratuities,But at the same time, it’s bad news for the rest of us who will likely feel even more obligated than ever to tip,What’s frustrating is that the tax benefits for tipped workers are not only over-hyped, they’re also temporary.
Yes, workers can avoid getting taxed on their tips – but not all workers (see below) and not all their tips.If you’re eligible, you can deduct up to $25,000 of tip income each year and there are income limitations.Also, you won’t see that benefit until you file your year-end tax returns.You also still have to pay in to social security and Medicare taxes.And it’s estimated that as many as one-third of those employees eligible for this deduction will never use it because their income is so low they don’t pay any federal taxes anyway.
Oh, and by the way, the deduction expires in 2028.So enjoy it while it lasts.Also irritating is who’s eligible.The treasury department recently published a list of about 50 types of workers who can claim the tipped-wages deduction.Unfortunately, I wasn’t consulted.
But if I were, then I would have been a little more particular,For example, I would never include “digital content creators” as eligible tipped workers,Really? Now we’re tipping influencers? Like MrBeast needs more money? Given all the harm that social media has wrought on this world, it’s probably better not to encourage these people with tax incentives,I was also surprised to see that electricians, plumbers and locksmiths who work in people’s homes are eligible for tips,These are licensed professionals performing a service.
Many are independent contractors or freelancers who are quite capable of coming up with their own fees.And those who are employed aren’t cheap either.I’m not sure where the line is drawn.Should I also be tipping the staff of my accounting firm? My life insurance agent?What exactly are “gambling and sports book writers and runners”? Who tips these people? I’m not a prude, but should we be enabling this industry in particular? Can the casinos not afford to pay these people enough?I can’t imagine who would tip a private event planner, either.Event planners work for people who have enough money to pay for event planners.
It seems silly to give these people a tax benefit for any tips on top of that.Finally, why in the world would anyone want to encourage “self-enrichment teachers” with a tax-free tip? I would think the best way to enrich oneself is to pocket your extra money and not further enrich the self-enrichment teacher.What’s next, tipping the guy who mansplains how the infield fly rule works?Now that I’ve listed some people who should be dropped from this benefit, it’s only fair to share a few who were unfairly left off.For example:Postal workers.Every year we tip our postal worker.
She provides a friendly, cheerful, daily service in rain, snow, sleet … well, you know the rest,Most of my friends do the same,Flight attendants,They load bags,They carry babies.
They walk around cabins during turbulence.They deal with jerks.And many don’t even start getting paid until the plane leaves the gate!School teachers.I don’t understand why everyone wrings their hands over how to improve compensation for our teachers and yet there are no tax incentives for parents to tip them.School bus drivers.
Them, too.Grocery store cashiers.All during Covid, while the rest of us stayed safely at home, watching Netflix and receiving our Amazon packages, the guy who ran the cash register at our local grocery store came in to work every day and did his job.His name is Emilio.Add him to the list, please.
If it were up to me, we’d be like the rest of the world and ban tips altogether.Instead of incentivizing people to tip, I’d tax tip income higher so employers would be forced to step up and just pay a fair wage.But that’s not reality in 21st-century America.So let’s just make this benefit permanent already instead of playing budgetary games and setting an expiration date near (surprise!) the next presidential election, so it can be a populist rallying point.Let’s also re-visit who is and isn’t eligible.
My final tip: when in Vegas, make your coffee in your room.
Here’s a tip: eliminate US tipping culture and pay people a living wage
I’m here in Las Vegas for a conference where I just paid $7 for a cup of coffee and then was shamed into tipping another $1 to the server for pouring the coffee and handing it to me. Welcome to America. I feel like I’m tipping for everything, everywhere. And now it’s only going to get worse. And for that I blame President Trump
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