Nevada

‘No Tax on Tips’ excites —and divides — Nevada voters

Published

2 years ago

August 6, 2024

‘No Tax on Tips’ excites —and divides — Nevada voters

LAS VEGAS — It’s a taxing question that might just tip the Silver State’s voting results in Donald Trump’s favor come Election Day.

Since the former president’s June 9 declaration of “No Tax on Tips” during a well-attended outdoor rally in Sin City, the idea has caught on with workers in several tip-reliant occupations, from brothels to beauty parlors.

Food and drink servers, unionized or not, also approve.

But it’s a long trip from the serving floor to the enactment of legislation. Despite an impressive lineup of backers — some of whom have no kind words for the ex-prez — the notion still faces formidable odds.

Among supporters are the Silver State’s two US Senators, Catherine Cortez Masto and Jacky Rosen, who’ve signed on as the sole Democrat co-sponsors of the “No Tax on Tips Act” introduced in June by Texas GOP Sen. Ted Cruz.

In the House, Nevada Reps. Steven Horsford and Susie Lee are the only Democrats to co-sponsor Rep. Byron Donalds (R-Fla.) measure that mirrors the Cruz bill.

Progress appears slow: The Cruz bill, S. 4 621, was assigned in June to the Senate Finance committee. H.R. 8941, the Donalds bill, was sent to the House Ways and Means panel. But neither measure has been scheduled for hearings.

Ted Pappageorge, secretary-treasurer of the Culinary Workers Union Local 226, would love to see the taxman barred from the tip jar.

Pappageorge told The Post that between 18,000 and 20,000 of his local’s 60,000 members are tipped employees.

“There’s no other concentration of tip earners that are actually represented by a union like this anywhere else” in the nation, he said.

Las Vegas has the highest concentration of tipped workers of any location in the country, a union official said. luckybusiness – stock.adobe.com

Pappageorge said his members “never had a peep” from President Joe Biden or Trump during their terms in office, but the union executive applauded the ex-prez for having “got the conversation started.”

Of greater value to tipped workers, Pappageorge said, would be to eliminate the federal “sub-minimum wage” of $2.13, where tips make up the difference between that and the $7.25 regular minimum, and just pay the regular minimum instead. Also helpful would be more sanity on the part of the IRS when the tax agency develops the “tip allocation rate,” its estimate of what tipped employees get in gratuities on which “they charge you taxes accordingly.”

Instead of setting a fixed allocation rate, the tax collectors should view tips “differently than wages,” he said. “We’re not say not taxes, but we’re saying it’s different.”

Pappageorge said the dollar amount of tips collected by his union members is not constant: “It’s up and down.”

Karen Off is the owner-operator of bustling Fringe hair salon in Mesquite, some 90 miles northeast of Las Vegas. She and the independent contractor stylists there get tips on top of fees for specific services, and Off said the idea of “no tax on tips” is appealing. “They tax us enough,” she said.

She said a tip is “an extra bonus that you earn. Because I know if I get a good waitress, she gets more than if I get somebody who never checks on me. … I earn my tips by doing a good job.”

Yolanda Scott, a 32-year Culinary Local 226 member in Las Vegas, said because of IRS tip allocations, “I just get whatever I get, because of the IRS takes control of that, and then my tips are kept. I get my tips at the end of my shift, my work shift.”

She said no taxes on tips would be “a great thing,” particularly since “everything is so expensive. I mean, we have to survive. We want to live.”

Liz Hudson, another union member who’s worked at the New York, New York casino for 25 years delivering drinks to gamblers on the casino floor, said she “would definitely benefit” from tax-free tips.

The benefit would give her “probably triple what I’m making now.”

Hudson said it would even help when patrons forget to tip when served.

“When we get stiffed, we’re getting taxed on that drink that we just brought out, and we get nothing for it,” she said. “So at least if we got rid of getting taxed, it wouldn’t be as much of a pain to not get tipped.”

Away from the Las Vegas Strip, over at the Red Rocks Casino Resort & Spa, server Bridget Brooks supports tax-free tips.

“It would be great,” she said. “They tax us so much we barely get a paycheck. I understand that the money goes to the economy, but how about taking it in other ways so they’re not taxing us more than we make?”

Not everyone is delighted with the proposal, however.

“I’m not sure why we would not tax their earnings versus other people’s earnings,” said David Neumark, distinguished professor of economics at the University of California—Irvine, who has studied the earning of tipped workers. “Everyone should be treated the same.”

He said “wages might fall” if tips aren’t taxed: “If I cut the tax on your income by 30%, your after tax income might not go up by 30% because more people may choose to work and that will lower pay.”

One business owner enthusiastically supports exempting tip income from taxes—and Trump, whose rally comments sparked the current legislation.

Bella Cummins, the 74-year-old operator of Bella’s Hacienda Ranch, a legal brothel in Wells, Nevada, near Reno, said the move would help operators lower operating costs.

“The brothel’s sex workers also benefit,” she said in a statement. “Legal sex workers are independent contractors who pay out of pocket for their medical fees, sheriff cards, and other business essentials such as adult toys and lingerie. When workers receive untaxed tips, it allows them to set more competitive prices for their services, attract more clients, enhance their reputation, and expand their customer base.”

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