Washington Post: Pocketing Tip Money Instead Of Paying It To The Feds Is Actually Bad For You
At the Washington Post, where credibility croaks in the coverage, business writer Shannon Najmabadi makes the case that eliminating taxes on tips is bad for tip workers. Yes, apparently the most caring thing employers can do for tip-earning workers is to make them pay more taxes and let them take home less money.
The background theme is: This is a Trump idea, let’s not get too excited or give him any credit.
“No tax on tips” was such a popular campaign promise when President Donald Trump first announced it in Las Vegas, Nevada, last year, that failed Democrat candidate Kamala Harris copied the pledge, promising the same thing. Even then, the WaPo warned that no tax on tips “may not help tipped workers.” Similarly, the article out this week warns that no tax on tips “could hurt employees.”
To be clear, the article admits the policy will help workers. It quotes Sen. Jacky Rosen, D-Nev., saying the measure would bring “immediate financial relief for countless hardworking families.”
That is not helpful enough to impress WaPo.
“Some advocates for restaurant workers and labor law experts call it a gimmick that could push employers to reclassify some salaries as tips and lock in a controversial practice that allows them to pay tipped workers as little as $2.13 an hour,” Najmabadi writes.
The minimum wage for tipped workers is lower than for workers who do not receive tips. For example, minimum wage in Delaware is $15 an hour for non-tipped workers like a restaurant chef and $2.23 an hour for tipped workers like a waiter. If tips don’t bring the waiter up to $15 an hour, the employer must bring the pay up to $15 an hour. The hourly rate varies by state. This has been the practice for decades.
Leftists with no clue about the costs of running a business have long wanted to raise minimum wage, and this desire is partly behind the opposition to removing taxes from tips. Yes, workers would have more money in their pockets, but employers would not be paying for it, and the plan could hinder efforts to raise minimum wage. The left hates that.
Najmabadi quotes David Cooper, of the leftist Economic Policy Institute, who complains that Congress is making tips more attractive, perpetuating the tipping business structure. But tipping is not going away, so it does make sense that Trump and Congress are working in the realm of reality — instead of Cooper’s weird wannabe world without tips, where everyone earns high hourly rates.
The Economic Policy Institute predicts that removing taxes from tips will make employers less likely to raise wages. It has concocted some weak reasons for why it believes taxing tips is better for workers. It predicts that no tax on tips will not help many people because they are already low-wage earners who do not pay taxes. It also predicts that more employers will want workers to become tipped employees so they can be paid the lower hourly rate. And it predicts that the plan could “encourage tax avoidance and deplete state budgets.”
Workers don’t care about depleted state budgets. They care about depleted household budgets. More money means more power to keep the lights on or to get a brake job done on the car. No tax on tips is not a gimmick; it is a real world solution that meaningfully improves the lives of people in every city.
Those opposed to tipped workers keeping their hard-earned money have never cashed out at the end of a long shift and sat in the back room doing their nightly taxes. If they had, they would not get in the way of workers taking home more money.
Beth Brelje is an elections correspondent for The Federalist. She is an award-winning investigative journalist with decades of media experience.
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