Former President Trump’s plan to end tip taxes could cost $250 billion, a budget watchdog estimated in a new analysis.
The Committee for a Responsible Federal Budget estimated Sunday that exempting tip income from federal income and payroll taxes could lead to a $150 billion to $250 billion reduction in federal revenues over a decade.
The watchdog noted that the estimate was calculated on “a static basis” and that it does not take into account certain behavioral effects, but is instead the “net of revenue gains” from the elimination of the Tip Credit from the Tax Act. Federal Insurance Contributions.
“In practice, exempting tip income from taxation would lead workers and employers to reclassify ordinary income as tip income whenever possible and could lead to a larger shift toward lower base wages and higher tip income, more broadly,” the group said.
The group said its analysis takes into account tax cuts that will expire as part of Trump’s signature 2017 tax law, such as lower individual tax rates.
“President Trump has called for an extension of these provisions that expire if he is elected to a second term, which would reduce the tax impact of the tip income exemption by between 10 and 15 percent, increasing deficits by between $125 and $225 billion.” , said the supervisory body.
Trump made headlines earlier this month when he promised to prioritize ending tip taxes if he wins back the White House later this year.
“For hoteliers and people who receive tips, you will be very happy. Because when I get into office, we will not tax tips,” Trump said during a rally in Las Vegas.
“Let’s do it immediately. First thing in office, because it’s been a point of contention for years and years and years,” she added. “And you do a great job; you take care of people and I think it will be something that is really deserved.”
This story originally appeared on thehill.com read the full story
