WASHINGTON (NEXSTAR) – Vice President Kamala Harris pledged to eliminate taxes on tips if she wins the presidency, echoing the same proposal former president Donald Trump announced in June.
No matter who wins the White House in November tax on tips could be a thing of the past.
“No tax on tips,” Trump said.
“Eliminate taxes on tips for service and hospitality workers,” Harris said.
Trump and Harris have now both backed the idea on the campaign trail.
“There are more than 2 million people working as servers and bartenders in restaurants, and we think this can put more money in their pocket,” Aaron Frazier of the National Restaurant Association said.
Frazier says service workers around the country rely largely on tips to help boost their income since many make a reduced minimum wage.
“These employees are vital to the hospitality that drives restaurants and really powers our economy,” Frazier said.
Financial experts say no tax on tips could have unintended consequences and companies could find loopholes to exploit the system.
“Sometimes fees and taxes and things like that can be like whac-a-mole,” Ted Rossman of Bankrate said.
Rossman also says that the tipping culture is changing.
“Increasing evidence that a lot of Gen-Z millennials, in particular, are stingy tippers,” Rossman said.
According to the Nonpartisan Committee for a Responsible Federal Budget, eliminating tax tips would leave a hole in federal revenue over the next decade of between $150 billion and $250 billion.
