Was hoping the “no tax on tips” thing was just campaign bluster. Really one of the dumbest ideas ever. So a drywall hanger making $50k pays taxes on his entire income, but a barista pays taxes on only $25k. And then qualifies for the earned income credit and doesn’t pay taxes at all but gets a gummint check to buy more tattoos. Sounds re…
Was hoping the “no tax on tips” thing was just campaign bluster. Really one of the dumbest ideas ever. So a drywall hanger making $50k pays taxes on his entire income, but a barista pays taxes on only $25k. And then qualifies for the earned income credit and doesn’t pay taxes at all but gets a gummint check to buy more tattoos. Sounds really fair. I can’t wait until corporate execs categorize their bonuses as tip income exempt from taxation.
Well, those who depend on gratuities for a living often don't earn a fair "base salary" to start with. FAR too many get some crazy below minimum wage base salary because of the expectation that the rest would be made up from tips. So - not really against that, but I'd much rather see the income tax go away (or at least flipped to a flat tax of some sort).
Some restaurants here hand you a little electronic device for payment while they stand there hovering over you to sign. There is also a tip amount checked for 25% that if you do not move the checkmark to another amount will be your tip! They must be counting on the fact that you would be embarrassed to give a lesser tip in front of them so you just sign. I stopped patronizing these restaurants after one time with that method of payment.
Never EVER use those machines. We always demand a paper check and paying manually. You do not have to comply with using those no matter what they say, and it’s worth making a stink over it. My excuse every time is “Are you out of your mind? How many times did the last customer lick their fingers before touching it and coughing all over it or spitting on it while they spoke and laughed? How many children played the games on it with grubby fingers? And you demanded masks?” They never argue with me and promptly bring me my paper check.
I tip according to quality of service provided, period.
I was a waitress from age 13 to 31, all through my high school and college days and as a second job after starting my career, and again as a stay-at-home mom when we needed to make ends meet one year. I understand tipping and I refuse to approve of any flat rate tip across the board for all servers or making it required. Like all work you EARN it. It’s a “gratuity”. How grateful are you for the particular service you received? A whole host of things plays into that, not just the attitude of the paying customer.
I worked fine dining and at every establishment I was continuously the highest tipped server and won every sales contest ever presented. I treated my non-tippers the same as my high rollers and everyone was treated like royalty regardless who they were or how grouchy they came off. They all knew this about me and they loved me, tippers or not. It drove some of my coworkers nuts that I earned so much, because unlike them I never complained about non-tippers and I treated them graciously and doted on them. They couldn’t wrap their heads around merit. It all evened out between the most and least generous and I always earned a fair wage for my stellar service. I averaged over 20% every, single, night. That was 35+ years ago when 10% was still the norm!
So today I have servers that sometimes get only 10% from me if their service was poor, narcissistic, and/or neglectful. It takes a truly awful human for me to leave only a couple bucks. I refuse to never tip because Zero looks like an oversight, but $2? Well that’s a wake up call.
We have had only had one occasion in our years of marriage where the service was so bad it did not deserve a tip. I mean so, so awful that we still laugh about it years later ("honey, remember when...???"). Instead of not leaving/reducing the tip we asked for the manager when paying the check and explained why we were not leaving a tip.
Thank you for your comment- my daughter is a server in an all you can eat hibachi/sushi restaurant- it's grueling- it's not buffet style- she delivers plate after plate of high end dishes to patrons, often working 12 hour shifts because many servers just slightly younger than she have zero work ethic and call off regularly during busy season (she's 25 and getting a Master's in acupuncture). She's gracious and attentive to everyone regardless of tip, expected or not. There's a certain clientele who regularly stay 2 hours, treat her disrespectfully and tips her $1, viewing such tips as a form of reparations to them - I'm sorry I have to even admit that this happens. This is seen by other patrons who often slip her a $10 as they walk out and they aren't even in her section. On balance she does very well despite these other clients, and most are very good to her. And some even redeem themselves during the meal - last month she had a party of 5 guys, 1 woman with a baby. The men made many off color jokes of a sexual nature in her presence and at her expense. She just remained neutral and gracious. They did tip her 20% and walked out, only to have one of the men walk back in and hand her a $50, and apologize for their behavior. Thankfully she has the prerogative to put them on a "do not serve" list that her manager respects.
I see that in airports all the time. I select my bottle of water and may have one other item I’m purchasing; the person stands there watching as I insert my card and the tip amount comes up at 25% which I then select no tip and leave. They provided absolutely no service but expect a tip. Hell no!
And we still see tips starting at 18% on the electronic payment device in WA. I always take the time to choose custom and max out at 15%. I run a business, and can only afford to pay my employees the minimum wage of $16.66/hr. They work pretty hard, and I'm still losing money on the business. I can't see paying my server on the rare occasions when I eat out more than my employees who I see working just as hard or more than the waiter.
In Texas starting wait staff receives $2.13 per hour and if their tips don’t bring them up to federal minimum wage of $7.25 (or whatever it is) then the restaurant has to pay the difference.
Hey there neighbor! Washington State has gone wackadoo about minimum wage and it is parsed from state wide at $16.66 to over $21.00 in Tukwilla. It’s a mixed bag of where minimum wage is $20/ hr. Mainly this is in unincorporated King County.
That legal base salary, during the first years of this century, was about $1.75 / hour. I did payroll for a restaurant and recall that number ... and the frantic furtive under-reporting of cash tip income that went on.
I'm with Jeff that the income tax should be completely abolished, but IF we are going to have an income tax, a flat tax is the most fair way to go about it.
I’m a big fan of the FairTax. It’s a tax on consumption, so that means anyone who spends money is subject to it. This means that black marketeers, illegal aliens, and anyone else getting paid under the table can’t escape because there’s no filing. By the way, it also abolishes the IRS. 😁
So with a flat tax, the high number of citizens who don’t pay anything would then be paying, right? And a flat tax on what exactly? Social Security, disability payment, Interest income, other investment income?
Think for a minute. I invite you to this exercise. Even if you're a lawyer, I'd bet a bunch of this has escaped you. --
The government is taxing your right, indeed the necessity for you to make a living. --
Pause. Think. --
...
Is this something the founders ensured was enshrined as a principle in the Constitution? Remember that a great part of the frustration of the colonists with their sovereign (George III) was the heaping on of taxes - on items like paper for instance, that practically no one alive in those times could do without? The Boston Tea Party (1773) was the colonists' "Hell no!" to the tax on tea. It took three more years before the movement for independence from that crap was formalized in the Declaration. --
Homework: Step 1: Check out Article 1 Sec. 9 § 4 of the Constitution. It addresses "Capitation" tax, meaning a "head" tax, or a tax on individuals. This is a form of direct tax; "direct" is also a word used in the §. Do we think income tax is a direct tax? A capitation tax? /sarc/ If you don't understand the principle of apportionment you have a little more homework. It's helpful to figure some things out on your own to understand the intent, as any good educator would argue. :) --
Step 2: Check out the 16th Amendment and remember, Article 1 Sec 9 §4 was never repealed. --
So... which one rules? --
I highly recommend doing the deep dive. --
The income tax as implemented is unconstitutional. The problem with taking that argument to court is that the creation of the IRS was done by code. Codes and statutes are not "law". The word "law" is ubiquitous, used to reference the law of the land, our Constitution, as well as codes and statutes. The IRS code (U.S. Code Title 26) with its some 4 million words or something is a "legal" ploy. "Legal" refers to codes and statutes. "Lawful" refers to the law of the land. All courts except federal courts are administrative courts, administering adherence to or violations of codes and statutes. Guess which courts arguments about the income tax go to? The Constitution has no relevance in administrative courts. None. --
The income tax as elaborated in U.S.C. Title 26 is not lawful, and is enforced under color of law. --
I can only scratch the surface here of this fvckery that's been foisted on Americans. --
More homework: Go directly to the tax code (U.S.C Title 26. Many sources online). Read §7701(c). Right there on the page you will read a definition of "includes" and "including". What? We need a definition of the words "includes" and "including"? What are we, idiots? We don't know what these words mean? Well... can you make sense of the way the definition is worded? This is obfuscation to the finest. Not only have they made it practically undecipherable, but here's the kicker: what they've done is created a new legal 𝘵𝘦𝘳𝘮. When used (as the definition states) in any other definition of yet another new 𝘵𝘦𝘳𝘮 (that all look 𝗲𝘅𝗮𝗰𝘁𝗹𝘆 like common words) the use of "includes" and "including" do not have their common meaning. They are not 𝘸𝘰𝘳𝘥𝘴 with the common meaning. --
While you're in §7701, take a gander at the use of "includes" and "including" in some of the other definitions - but only after you've figured out for certain what is meant by the new 𝘵𝘦𝘳𝘮𝘴 "includes" and "including". Fvckery. --
I'm not a lawyer. Happily. Not that there aren't some well-intentioned lawyers with good hearts (Hi, Mr. Childers 😁). But oh how they have manipulated our language with full intent to manipulate us.
The income tax is actually entirely avoidable, LEGALLY. 'They' don't want you to know this. Some people have figured it out. A minuscule minority. No great hit to the IRS's bottom line. More homework for you. Try this resource: https://losthorizons.com You can read the book (very dense, an exercise, some 250pp+ long) 𝐶𝑟𝑎𝑐𝑘𝑖𝑛𝑔 𝑡ℎ𝑒 𝐶𝑜𝑑𝑒: 𝑇ℎ𝑒 𝐹𝑎𝑠𝑐𝑖𝑛𝑎𝑡𝑖𝑛𝑔 𝑇𝑟𝑢𝑡ℎ 𝐴𝑏𝑜𝑢𝑡 𝑇𝑎𝑥𝑎𝑡𝑖𝑜𝑛 𝑖𝑛 𝐴𝑚𝑒𝑟𝑖𝑐𝑎 for fre*e on the website. An excellent learning experience. --
Man, have I written a book here myself? Going now.
Agree, tips are just another form of income, there's no legitimate reason it should be excluded from income tax when other sources aren't. If tips are excluded, then why isn't my Christmas bonus? It's just a giant tip paid all at once after all.
This no tax on tips idea was a political ploy to win Nevada. It cannot be defended based on policy as it excludes one group from the tax the rest of must pay with no rationale justification. I get why people who get tips like it, but why would anyone else?
"If tips are excluded, then why isn't my Christmas bonus?"
I know, right? Do you know how hard the accounting becomes when you have to give the government a percentage of your "Jelly of the Month Club" membership?
Except lawyers, bankers, and politicians who deal with the public , but I would make an exception for pithy-substack-writing-lawyers ..they should be included.
Art: I believe the language regarding tips refers to historical jobs that traditionally rely on tips are eligible but not other professions. Those same jobs, are allowed to have a lower base wage that is lower than the federal, state, and local level. Prior to this proposal, those individuals were always playing from behind.
"...The Act would allow “traditionally tipped employees” to claim a 100% deduction on tipped wages, not to exceed $25,000. (In other words, they’d still have to report the tips.)"
Not to worry. They are still REQUIRED to report the tips. When have you ever seen a tax exemption that wasn't later subjected to increasing tax rates??? This won't go untaxed long. It's just more political theater.
The only fair tax is a tax on what you buy. That way people who work and are paid cash either legally (maids) or illegally ( like drug dealers, etc) pay a share. This would go for illegals or people on give away programs also. Everyone pays on what you buy.
Was hoping the “no tax on tips” thing was just campaign bluster. Really one of the dumbest ideas ever. So a drywall hanger making $50k pays taxes on his entire income, but a barista pays taxes on only $25k. And then qualifies for the earned income credit and doesn’t pay taxes at all but gets a gummint check to buy more tattoos. Sounds really fair. I can’t wait until corporate execs categorize their bonuses as tip income exempt from taxation.
Well, those who depend on gratuities for a living often don't earn a fair "base salary" to start with. FAR too many get some crazy below minimum wage base salary because of the expectation that the rest would be made up from tips. So - not really against that, but I'd much rather see the income tax go away (or at least flipped to a flat tax of some sort).
Not in Washington, they’re making $20 an hour. People are starting to get sick of tipping altogether. Used to be merit related, now it’s demanded.
Some restaurants here hand you a little electronic device for payment while they stand there hovering over you to sign. There is also a tip amount checked for 25% that if you do not move the checkmark to another amount will be your tip! They must be counting on the fact that you would be embarrassed to give a lesser tip in front of them so you just sign. I stopped patronizing these restaurants after one time with that method of payment.
Never EVER use those machines. We always demand a paper check and paying manually. You do not have to comply with using those no matter what they say, and it’s worth making a stink over it. My excuse every time is “Are you out of your mind? How many times did the last customer lick their fingers before touching it and coughing all over it or spitting on it while they spoke and laughed? How many children played the games on it with grubby fingers? And you demanded masks?” They never argue with me and promptly bring me my paper check.
I tip according to quality of service provided, period.
I was a waitress from age 13 to 31, all through my high school and college days and as a second job after starting my career, and again as a stay-at-home mom when we needed to make ends meet one year. I understand tipping and I refuse to approve of any flat rate tip across the board for all servers or making it required. Like all work you EARN it. It’s a “gratuity”. How grateful are you for the particular service you received? A whole host of things plays into that, not just the attitude of the paying customer.
I worked fine dining and at every establishment I was continuously the highest tipped server and won every sales contest ever presented. I treated my non-tippers the same as my high rollers and everyone was treated like royalty regardless who they were or how grouchy they came off. They all knew this about me and they loved me, tippers or not. It drove some of my coworkers nuts that I earned so much, because unlike them I never complained about non-tippers and I treated them graciously and doted on them. They couldn’t wrap their heads around merit. It all evened out between the most and least generous and I always earned a fair wage for my stellar service. I averaged over 20% every, single, night. That was 35+ years ago when 10% was still the norm!
So today I have servers that sometimes get only 10% from me if their service was poor, narcissistic, and/or neglectful. It takes a truly awful human for me to leave only a couple bucks. I refuse to never tip because Zero looks like an oversight, but $2? Well that’s a wake up call.
We have had only had one occasion in our years of marriage where the service was so bad it did not deserve a tip. I mean so, so awful that we still laugh about it years later ("honey, remember when...???"). Instead of not leaving/reducing the tip we asked for the manager when paying the check and explained why we were not leaving a tip.
Thank you for your comment- my daughter is a server in an all you can eat hibachi/sushi restaurant- it's grueling- it's not buffet style- she delivers plate after plate of high end dishes to patrons, often working 12 hour shifts because many servers just slightly younger than she have zero work ethic and call off regularly during busy season (she's 25 and getting a Master's in acupuncture). She's gracious and attentive to everyone regardless of tip, expected or not. There's a certain clientele who regularly stay 2 hours, treat her disrespectfully and tips her $1, viewing such tips as a form of reparations to them - I'm sorry I have to even admit that this happens. This is seen by other patrons who often slip her a $10 as they walk out and they aren't even in her section. On balance she does very well despite these other clients, and most are very good to her. And some even redeem themselves during the meal - last month she had a party of 5 guys, 1 woman with a baby. The men made many off color jokes of a sexual nature in her presence and at her expense. She just remained neutral and gracious. They did tip her 20% and walked out, only to have one of the men walk back in and hand her a $50, and apologize for their behavior. Thankfully she has the prerogative to put them on a "do not serve" list that her manager respects.
I am exactly like you, JuJu. Were you a bunny?
I see that in airports all the time. I select my bottle of water and may have one other item I’m purchasing; the person stands there watching as I insert my card and the tip amount comes up at 25% which I then select no tip and leave. They provided absolutely no service but expect a tip. Hell no!
If I knew my waitstaff were earning $20 an hour... there's no way I'd be tipping. And I like tipping.
Yep! Was just about to post that about wages in WA state.
And we still see tips starting at 18% on the electronic payment device in WA. I always take the time to choose custom and max out at 15%. I run a business, and can only afford to pay my employees the minimum wage of $16.66/hr. They work pretty hard, and I'm still losing money on the business. I can't see paying my server on the rare occasions when I eat out more than my employees who I see working just as hard or more than the waiter.
SC hourly rate for wait staff is still $3.50! They say tips bring them up to legal minimum wage of $7.50. No lie.
In Texas starting wait staff receives $2.13 per hour and if their tips don’t bring them up to federal minimum wage of $7.25 (or whatever it is) then the restaurant has to pay the difference.
Hey there neighbor! Washington State has gone wackadoo about minimum wage and it is parsed from state wide at $16.66 to over $21.00 in Tukwilla. It’s a mixed bag of where minimum wage is $20/ hr. Mainly this is in unincorporated King County.
That legal base salary, during the first years of this century, was about $1.75 / hour. I did payroll for a restaurant and recall that number ... and the frantic furtive under-reporting of cash tip income that went on.
Ronald Reagan: 10% flat tax. Kind of like a tithe, you know?
Russia has a 13 % flat tax
Thank YOU Roland TTG.
Yes, just an across the board $25k increase in the standard deduction applied to everyone would be better.
Tips are a gift. 10% for good service.
Even God only asks for 10% .
No tax on tips.
Taxes are very unfair.
Get rid of as many taxes as you can !!!
But if it were a flat tax, how would that affect tips? Tips would not be reported and therefore would not even be in the equation then?
I'm with Jeff that the income tax should be completely abolished, but IF we are going to have an income tax, a flat tax is the most fair way to go about it.
I’m a big fan of the FairTax. It’s a tax on consumption, so that means anyone who spends money is subject to it. This means that black marketeers, illegal aliens, and anyone else getting paid under the table can’t escape because there’s no filing. By the way, it also abolishes the IRS. 😁
Curious? You should be! Www.fairtax.org
Yes, fair tax/consumption tax is obviously the best solution.
Abolish the IRS is the best idea I’ve heard.
We got along fine without the IRS before the IRS started in 1913.
So with a flat tax, the high number of citizens who don’t pay anything would then be paying, right? And a flat tax on what exactly? Social Security, disability payment, Interest income, other investment income?
Pause. --
Think for a minute. I invite you to this exercise. Even if you're a lawyer, I'd bet a bunch of this has escaped you. --
The government is taxing your right, indeed the necessity for you to make a living. --
Pause. Think. --
...
Is this something the founders ensured was enshrined as a principle in the Constitution? Remember that a great part of the frustration of the colonists with their sovereign (George III) was the heaping on of taxes - on items like paper for instance, that practically no one alive in those times could do without? The Boston Tea Party (1773) was the colonists' "Hell no!" to the tax on tea. It took three more years before the movement for independence from that crap was formalized in the Declaration. --
Homework: Step 1: Check out Article 1 Sec. 9 § 4 of the Constitution. It addresses "Capitation" tax, meaning a "head" tax, or a tax on individuals. This is a form of direct tax; "direct" is also a word used in the §. Do we think income tax is a direct tax? A capitation tax? /sarc/ If you don't understand the principle of apportionment you have a little more homework. It's helpful to figure some things out on your own to understand the intent, as any good educator would argue. :) --
Step 2: Check out the 16th Amendment and remember, Article 1 Sec 9 §4 was never repealed. --
So... which one rules? --
I highly recommend doing the deep dive. --
The income tax as implemented is unconstitutional. The problem with taking that argument to court is that the creation of the IRS was done by code. Codes and statutes are not "law". The word "law" is ubiquitous, used to reference the law of the land, our Constitution, as well as codes and statutes. The IRS code (U.S. Code Title 26) with its some 4 million words or something is a "legal" ploy. "Legal" refers to codes and statutes. "Lawful" refers to the law of the land. All courts except federal courts are administrative courts, administering adherence to or violations of codes and statutes. Guess which courts arguments about the income tax go to? The Constitution has no relevance in administrative courts. None. --
The income tax as elaborated in U.S.C. Title 26 is not lawful, and is enforced under color of law. --
I can only scratch the surface here of this fvckery that's been foisted on Americans. --
More homework: Go directly to the tax code (U.S.C Title 26. Many sources online). Read §7701(c). Right there on the page you will read a definition of "includes" and "including". What? We need a definition of the words "includes" and "including"? What are we, idiots? We don't know what these words mean? Well... can you make sense of the way the definition is worded? This is obfuscation to the finest. Not only have they made it practically undecipherable, but here's the kicker: what they've done is created a new legal 𝘵𝘦𝘳𝘮. When used (as the definition states) in any other definition of yet another new 𝘵𝘦𝘳𝘮 (that all look 𝗲𝘅𝗮𝗰𝘁𝗹𝘆 like common words) the use of "includes" and "including" do not have their common meaning. They are not 𝘸𝘰𝘳𝘥𝘴 with the common meaning. --
While you're in §7701, take a gander at the use of "includes" and "including" in some of the other definitions - but only after you've figured out for certain what is meant by the new 𝘵𝘦𝘳𝘮𝘴 "includes" and "including". Fvckery. --
I'm not a lawyer. Happily. Not that there aren't some well-intentioned lawyers with good hearts (Hi, Mr. Childers 😁). But oh how they have manipulated our language with full intent to manipulate us.
The income tax is actually entirely avoidable, LEGALLY. 'They' don't want you to know this. Some people have figured it out. A minuscule minority. No great hit to the IRS's bottom line. More homework for you. Try this resource: https://losthorizons.com You can read the book (very dense, an exercise, some 250pp+ long) 𝐶𝑟𝑎𝑐𝑘𝑖𝑛𝑔 𝑡ℎ𝑒 𝐶𝑜𝑑𝑒: 𝑇ℎ𝑒 𝐹𝑎𝑠𝑐𝑖𝑛𝑎𝑡𝑖𝑛𝑔 𝑇𝑟𝑢𝑡ℎ 𝐴𝑏𝑜𝑢𝑡 𝑇𝑎𝑥𝑎𝑡𝑖𝑜𝑛 𝑖𝑛 𝐴𝑚𝑒𝑟𝑖𝑐𝑎 for fre*e on the website. An excellent learning experience. --
Man, have I written a book here myself? Going now.
Agree, tips are just another form of income, there's no legitimate reason it should be excluded from income tax when other sources aren't. If tips are excluded, then why isn't my Christmas bonus? It's just a giant tip paid all at once after all.
This no tax on tips idea was a political ploy to win Nevada. It cannot be defended based on policy as it excludes one group from the tax the rest of must pay with no rationale justification. I get why people who get tips like it, but why would anyone else?
Boob bait for bubba as Bill Clinton used to say.
"If tips are excluded, then why isn't my Christmas bonus?"
I know, right? Do you know how hard the accounting becomes when you have to give the government a percentage of your "Jelly of the Month Club" membership?
No, Jeff, taxes are theft by government. Let’s get rid of as many taxes as we can. We got along fine before the IRS was started in 1913.
No tax on tips. Abolish the IRS.
The federal government can fund itself with tariffs as it did before 1913 .
Also many servers in high end bars, restaurants, hotels make bank. Abolish income tax for everyone making less than 100k. Mo bettah
One of our sons backpacked around the world, then ended up surfing our couch in Seattle til he found a permanent gig.
During those few months, he found a bartender job across the lake in Bellevue and was bringing home $200+ nightly.
He'd go around the corner to an Irish bar each night after close and they'd always let him drink free.
More power to him. No tax on tips.
There is nothing logical or fair about the fed's income tax code.
You said it, Paul. The IRS ought to be abolished.
The federal government can fund itself with tariffs the same way it did before the IRS began in 1913 .
I love a good drywall hanger, but those getting tips are often dealing with people…and people can be so, well
people-y 😂. Bless those baristas lol
That doesn't qualify as a reason for a tax break. Anyone who deals with the public should get the same deduction.
I like your plan!
Breaks for everyone who deal with people-y ! 😁
Except lawyers, bankers, and politicians who deal with the public , but I would make an exception for pithy-substack-writing-lawyers ..they should be included.
I think a barista is exempt from taxes on tips up to $25,000 and then at $25,000+ in tips, the tips are taxable again above that amount.
Art: I believe the language regarding tips refers to historical jobs that traditionally rely on tips are eligible but not other professions. Those same jobs, are allowed to have a lower base wage that is lower than the federal, state, and local level. Prior to this proposal, those individuals were always playing from behind.
How about Substack writers.🤔
I agree there should be no tax on tips!
None! Tips are gifts !! no tax on gifts.!
"...The Act would allow “traditionally tipped employees” to claim a 100% deduction on tipped wages, not to exceed $25,000. (In other words, they’d still have to report the tips.)"
Not to worry. They are still REQUIRED to report the tips. When have you ever seen a tax exemption that wasn't later subjected to increasing tax rates??? This won't go untaxed long. It's just more political theater.
The only fair tax is a tax on what you buy. That way people who work and are paid cash either legally (maids) or illegally ( like drug dealers, etc) pay a share. This would go for illegals or people on give away programs also. Everyone pays on what you buy.