WASHINGTON – In your private meeting with Senate Republicans Last week, former president donald trump joked that one new campaign argument made him very popular with caddies at his golf course near Mar-a-Lago: ending taxes on money earned from tips.
It’s an idea that was applauded in the senators’ room and to which Trump will likely return as he courts working-class voters in swing states with large service industries, such as Nevada, Arizona and Georgia, in his rematch this fall with President Joe Biden.
But it’s unclear whether the election year theme will materialize as a serious political plan on Capitol Hill. Several influential Republicans told NBC News they are skeptical of the idea, citing the rising national debt and questioning whether it would be fair to wage earners who don’t tip.
Trump also mentioned his desire to end tip taxes in a previous meeting with House Republicans, the congressman said. Tim BurchettR-Tenn, who added that Trump told lawmakers how a waitress gave him the idea.
“This thing really caught fire organically,” Burchett, a Trump ally, said Monday, calling Trump’s proposal “smart policy.”
Three Republican senators who heard Trump’s comments in a separate closed-door meeting mentioned his tax and tip proposal unprompted as they left last week. Senator Ted Cruz, Republican of Texas, a former Trump rival, said the idea is “fantastic” and could change voters’ perceptions of the parties.
“For someone who works as a waiter or waitress, or for someone who works as a taxi driver, or for someone who works as a bellboy at a hotel, there are a lot of people who are starting to move up the economic ladder and rely on tips,” Cruz said, who faces his own re-election battle this year in Texas. “The caricature of Republicans is that Republicans were the party of the rich and Democrats are the party of the poor and working class.”
Other Republicans are skeptical of the fledgling proposal.
“I don’t know if it’s just making a unilateral decision about tips rather than focusing on workers in general,” Rep. Chip Roy, R-Texas, an influential conservative, said in an interview. “Like, why would you favor someone who earns tips over someone else who earns similar wages? … It might even raise some legal questions in terms of how you treat one person versus another.”
“The idea of ensuring that working families are not burdened with taxes? Good. Differentiating between tips and non-tips, I’m not sure I fully believe that,” Roy said.
Representative. Vern BuchananR-Fla., vice chairman of the Tax Writing Ways and Means Committee, also said he is not convinced by the idea of reclassifying how tips are taxed, citing the growing national debt.
“You just need to be careful with it. We have these trillion dollar deficits. You have to be careful with all of this,” Buchanan said. “I want to be sensitive, because they work a lot. And obviously a big part of your earnings are tips. All of these programs look good; everyone likes to pay less taxes. But we have to pay the bills.”
According to the IRS, all cash and non-cash tips are subject to federal income tax. This means that Congress would need to step in and pass a law to exempt tips from being taxed in the future. Main parts of Trump tax cuts they expire at the end of 2025, and if he is elected, Trump’s tipping idea could be on the menu for lawmakers looking to rewrite the tax code.
Such a measure would have significant impacts on the debt.
The Committee for a Responsible Federal Budget, a research group that advocates reducing red ink, estimated in a Sunday newspaper that exempting tips from income and payroll taxes could reduce federal revenue by up to $250 billion in 10 years.
Asked whether the campaign has political details or a cost estimate, Trump spokeswoman Karoline Leavitt said in an email: “President Trump intends to ask Congress to eliminate tip taxes to put more money back in his pockets. of the sector’s hard workers. On the contrary, Joe Biden has aggressively stepped up the IRS by going after tipped workers.” (The White House says the extra IRS funds that Biden secured aim to improve customer service and target wealthy tax evaders, not low- or middle-income ones.)
Lael Brainard, a top Biden White House adviser, responded cautiously when asked about Trump’s idea, citing Hatch Act prohibitions on political activity by West Wing employees.
Broadly speaking, Brainard told reporters on a conference call last week, Biden has “fought for real solutions that actually meet workers’ legitimate need for fair wages” and has better ideas for Nevada’s wage earners — including a higher minimum wage and protections of overtime.
“So our view is that the significant set of policy changes that would really raise the living standards of Nevada workers and workers across the country would be to raise the minimum wage and eliminate the tipped minimum wage, leading to $6,000 a more in income per year. ,” she said.
A day after visiting the Capitol, while celebrating his 78th birthday with supporters at the West Palm Beach Convention Center in Florida, Trump retold the story of the tipping proposal in more detail. He was at a restaurant in Las Vegas and asked a waitress what it would take to win her vote. She told him to eliminate tip taxes, Trump said. To spread the word, he instructed his supporters to write on restaurant receipts: “Vote for Trump because there is no tip tax.”
One Trump loyalist, Rep. Marjorie Taylor Greene, R-Ga., did just that, tweeting a photo of a receipt with the message “VOTE TRUMP! no tip tax!!”
Rep. Byron Donalds, R-Fla., another Trump ally, also applauded the idea.
“Listen, as a former waiter — I waited tables in college and a little bit after college — I think we should definitely do this,” Donalds said. “Waiters, waitresses, service people – they work hard every day. They work hard and are not millionaires. Going after them like that doesn’t make sense to me.”
And Sen. Kevin Cramer, R-N.D., who told Trump’s story about his caddies, also sees the tipping proposal as a way to win over voters: “The tipping issue is good for Trump and good for Republicans. Working-class voters haven’t been this pro-Republican since Reagan,” Cramer said in a brief interview Monday.
Burchett said the economic impact would be positive, despite the red ink the policy could create.
“I don’t think these people are going to stick this in a mattress or bury it in a glass jar in their backyard. They’re going to put it back into the economy very quickly,” he said. “I’d rather Americans invest this rather than have the federal government steal it.”
This article was originally published in NBCNews. with
