Vice President Kamala Harris’ proposal to eliminate the tip tax and raise the federal minimum wage could cost up to $200 billion over 10 years, according to a new analysis from a budget watchdog group.
The Committee for a Responsible Federal Budget (CRFB) said on Monday Estimation Exempting tip income from federal income taxes and raising the minimum wage could increase the national deficit by $100 billion to $200 billion over 10 years.
The analysis comes after Harris vowed last weekend to “raise the minimum wage and eliminate tip taxes for service and hospitality workers” if elected president.
Her comments came just weeks after former President Donald Trump also pledged to prioritize repealing the tip tax if he returns to the White House later this year, saying, “hotel workers and people who get tips will be very happy.”
At the time, the CRFB estimated that Trump’s plan to exempt tip income from federal income and payroll taxes could reduce federal revenues by $150 billion to $250 billion over 10 years.
But in contrast, the CRFB noted in its analysis on Monday that “based on communications with the Harris campaign, the proposal would exempt tips from income tax but leave them subject to payroll tax.”
Campaign officials also noted that Trump has indicated he would “work with Congress to establish income limits and different guidelines for the exemption from tax on tip income.”
“As president, she would work with Congress to craft a proposal with income limits and strict requirements to ensure hedge fund managers and lawyers don’t create compensation structures that allow them to exploit the policy,” the official said. The Washington Post.
The Hill has reached out to Harris’ campaign for comment.
The group noted that the estimate doesn’t take into account “changing tipping behavior” and that Harris’ “proposals could potentially increase the deficit even more if the impacts of her actions were fully considered.”
