Vice President Harris surprised Democratic lawmakers and progressive activists by endorsing a proposal first introduced by former President Trump to exempt tips for service and hospitality workers from taxes, an idea that Democrats had previously criticized as “false” and a “maneuver” to obtain votes.
Harris’ support for the idea is being seen as an aggressive play for votes in Nevada, a critical state where service workers will be key, and as an effort to neutralize any advantage Trump may have gained by first introducing the idea during meetings with Republican lawmakers. at the Capitol in June.
But top Democratic lawmakers and progressive activists have raised serious concerns about the substance of the proposal to protect diverted income from taxation, fearing it would leave out many low- and middle-income workers who are equally deserving of tax benefits but don’t get them. work to get tips.
Policy experts also question how such a proposal could be drafted without having major impacts on economic behavior, potentially costing the federal government much more than the $100 billion to $200 billion currently expected to be added to the national debt over the next 10 years. years.
Another criticism from the left is that employers could use tax-free tips as an excuse for not increasing base wages and could even lead some companies to become more aggressive in soliciting tips from customers rather than increasing workers’ hourly wages.
“It wasn’t something I expected,” said a Democratic Senate aide. “I didn’t expect her to choose to receive tips. I didn’t see it as a serious proposal from Trump and it doesn’t become a serious proposal now.”
Senior Democrats on the Senate Finance Committee and the House Ways and Means Committee, which have primary jurisdiction over the tax code, criticized the proposal when Trump first introduced it in meetings with Republican lawmakers in June.
Trump told Republican senators that he got the idea from a waitress he met.
Senate Finance Committee Chairman Ron Wyden (D-Ore.) called Trump’s idea of eliminating tip taxes a “false proposal” and predicted it would be eliminated by other Trump policies, such as tariffs, which would increase the cost of goods.
Rep. Lloyd Doggett (D-Texas), a senior member of the Ways and Means Committee, called the proposal to protect tips from taxes an “election year trap.”
Lael Brainard, director of the White House Economic Council, declined to comment on the idea of eliminating tip taxes when Trump put it in the spotlight in June.
“What I can say is that President Biden has fought for real solutions that actually meet workers’ legitimate needs for fair wages, we think in a much more effective way,” she told The Associated Press in mid-June.
Sen. Debbie Stabenow (Mich.), a member of Senate Democratic leadership and the Senate Finance Committee, said in June that she didn’t think Trump’s proposal was serious and expressed doubt it would do enough to help low-income workers. salaries.
The Democratic Senate aide said the idea had not received any serious discussion in the Senate before Trump introduced it in June.
Steven Rosenthal, a senior fellow at the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution, said it would be very difficult to craft legislation to exempt diverted income from taxes to prevent people from trying to exploit it.
“I don’t know how I would exclude my plumber or my maid. Are these service workers? If they are employees… will the employer ask that employees be compensated more in tips going forward?” he asked. “We already have a lot of people asking for tips. …What will we see? A supermarket cashier asking for tips? Plumbers? Where would you draw that line?
Rosenthal said there is no difference between Trump and Harris’ plans, but cautioned that it is difficult to say because neither candidate has provided many details about their proposals.
“Trump proposed no tax on tips in June and the left has largely criticized that proposal. So for Harris to offer a virtually identical approach [proposal]I think it catches people by surprise,” he said.
“I try to call the ball and hit it straight. To me, both Trump’s and Harris’s ‘No Tax on Tips’ are very poor ideas,” he said.
Harris’ campaign has weathered the criticism, encouraging The Hill to contact former Nevada governor Steve Sisolak, a Democrat, and unions who support the idea.
Sisolak could not be reached for comment, but Nevada’s two Democratic senators are supporting the proposal to eliminate taxes on tip income.
Sen. Jacky Rosen (D-Nev.), who is in a tough re-election battle, and Sen. Catherine Cortez Masto (D-Nev.) last month announced their support for the No Tax on Tips Act.
The proposal also has the support of the powerful Nevada Culinary Union, Nevada’s largest working women’s organization.
Ted Pappageorge, secretary-treasurer of the Culinary Union, said protecting tips from taxes “would provide relief to hospitality workers.”
White House press secretary Karine Jean-Pierre said Monday that Biden would “absolutely” sign legislation to eliminate indirect payroll taxes if it reached his desk.
But Harris’ surprising support for one of Trump’s key tax ideas underscored the sense of uncertainty that many Democrats and progressive activists feel about their stance on key economic issues.
Democrats have assumed for weeks that Harris would largely continue Biden’s economic and fiscal agendas, but her campaign has released little information about her political views, leaving many political allies guessing where she would land on key issues if elected president.
Trump’s historic 2017 Tax Cuts and Jobs Act is set to expire at the end of 2025, setting up tax reform as the main issue in the new Congress next year, and some Democrats consider Harris’ lack of a clear economic agenda separate from worrying from Biden.
Bob Borosage, co-director of the Campaign for America’s Future, said progressives were caught off guard by Harris’ surprise endorsement of Trump’s idea.
“Most people thought it was a silly idea when Trump did it,” he said.
“I think she just endorsed it to get it off the table. I don’t think it’s a serious thing,” she added.
Borosage said he and other progressives are more focused on the fight to increase the so-called subminimum wage that restaurant servers and student professionals, for example, earn hourly. This level is below the legal minimum wage earned by non-tipped workers.
“The real issue is the subminimum wage and whether we are going to raise it and overcome opposition from the restaurant lobby. And she is in favor of the increase and the minimum wage itself,” she stated.
Minimum wage workers in some states earn as little as $2.13 per hour, while the federal minimum wage is currently $7.25 per hour.
Borosage said “we don’t know” whether Harris will continue Biden’s economic and fiscal policies.
“There’s no way to really know until she presents her platform, which she hasn’t done yet,” he said, although he noted that Harris’ campaign has promised to reveal her political views in more detail soon.
Harris ran as a bold progressive ahead of the 2020 Democratic presidential primaries, signing Sen. Bernie Sanders’ (I-Vt.) Medicare for All Act in 2019 and announcing that she would support eliminating the Senate filibuster to enact the comprehensive Green New Deal for transform the US economy into a green energy economy. She has since backed away from those ambitious proposals.
This story originally appeared on thehill.com read the full story
