LAS VEGAS — It’s a tough question that could tilt the Silver State’s vote in Donald Trump’s favor on Election Day.
Since the former president declared at a packed outdoor rally in Las Vegas on June 9 that he would “not tax tips,” the idea has caught on among workers in a variety of jobs that rely on tips, from brothels to hair salons.
Food and beverage servers, unionized or not, agree.
But the bill has a long way to go before it becomes law, and while it has an impressive list of supporters, some of whom don’t have kind words for the former president, the initiative still faces significant obstacles.
Among its supporters are Texas senators Catherine Cortez Masto and Jacky Rosen, who signed on as the only Democratic co-sponsors of the Tip Tax Repeal Act introduced in June by Texas Republican Sen. Ted Cruz.
In the House of Representatives, Nevada Reps. Steven Horsford and Susie Lee are the only Democrats co-sponsoring a bill from Rep. Byron Donald (R-Fla.) that is very similar to Cruz’s bill.
Progress appears to be slow. Cruz’s bill, S. 4621, was assigned to the Senate Finance Committee in June. Donald’s bill, H.R. 8941, was sent to the House Ways and Means Committee. But neither bill has been scheduled for a hearing.
Ted Papageorge, secretary-treasurer of the Culinary Workers Union Local 226, is keen to see tax collectors barred from tip boxes.
Papageorge told The Post that of the chapter’s 60,000 members, between 18,000 and 20,000 are tipped employees.
“There is no other group of tip earners in the country represented by a union like this,” he said.
Papageorge said union members “never heard a word” from either President Joe Biden or Trump during their presidencies, but union leaders praised the former president for “starting a dialogue.”
Papageorge said what would be more valuable for tipped workers would be to eliminate the federal “subminimum wage” of $2.13, which makes up the difference between that $7.25 and the regular minimum wage for tips, and instead just pay the regular minimum wage. It would also help to give the IRS more reason to be reasonable when the tax agency creates a “tip allocation percentage,” or an estimate of how much tipped employees receive in tips, and “imposes tax accordingly.”
Instead of setting a fixed percentage, tax collectors should view tips “as something separate from wages,” he said. “I’m not saying we don’t tax it, but I’m saying it’s different.”
Papageorge said the amount of tips members collect is not constant and “it goes up and down.”
Karen Off [STET] Off is the owner and operator of the bustling Fringe Hair Salon in Mesquite, about 90 miles northeast of Las Vegas. He and his independent stylists earn tips in addition to fees for specific services. He said the idea of ”not paying tax on tips” was appealing. “They tax us enough,” Off said.
She said tips are “an added bonus that you earn because I know that if I get a good waitress, she’s going to earn more than if I get a waitress who never checks on me. … I earn tips by doing a good job.”
Yolanda Scott, a member of Culinary Local 226 in Las Vegas for 32 years, said of the IRS’s tip allocation, “The IRS controls it, so I get what I get. The tips are mine. I get my tips at the end of my shift, the end of my work shift.”
She said it’s “great” that there’s no tax on tips, especially since “everything is so expensive. We have to survive, and we want to live.”
Liz Hudson, another union member who worked in casinos in New York, N.Y., for 25 years delivering drinks to gamblers on the casino floor, said tax-free tips are “definitely a benefit.”
The benefit will give her “probably triple what I’m making now.”
Hudson said it would also be useful if customers forgot to tip after receiving service.
“If we don’t tip, they tax the drinks we bring and we don’t get anything,” she said. “So if there was no tax, not getting a tip wouldn’t hurt as much.”
Red Rocks Casino Resort & Spa off the Las Vegas Strip [STET]Server Bridget Brooks supports tax-free tips.
“That’s great,” she said. “Our taxes are so high that we barely get paid. I get that the money goes into the economy, but what if we get the money in other ways so that we’re not taxing ourselves more than we earn?”
But not everyone is happy with the proposal.
“I don’t see why we shouldn’t tax tipped workers relative to how much they earn,” said David Newmark, a professor emeritus of economics at the University of California, Irvine, who has studied tipped worker incomes. “Everyone should be treated the same.”
He said that if tips were not taxed, “wages could go down.” “If you cut income taxes by 30 percent, after-tax income may not go up by 30 percent because more people will choose to work and wages will go down.”
One business owner is an enthusiastic supporter of a tax exemption for tip income, and of the exemption offered by Trump, whose comments at the rallies led to the current law.
Bella Cummins, 74, owner of Bella’s Hacienda Ranch, a legal brothel in Wells, Nevada, near Reno, said the measure would help operators cut operating costs.
“Sex workers in brothels also benefit,” she said in a statement. “Legal sex workers are independent contractors who pay out of their own pockets for medical expenses, security cards and other expenses essential to their business, like sex toys and lingerie. When workers receive tax-free tips, they are able to price their services more competitively and attract more clients, improving their reputation and expanding their client base.”
