Republican Reps. Matt Gaetz (Florida) and Thomas Massie (Ky.) introduced a bill that seeks to eliminate taxes on tips after former President Trump said it would be the “first thing” he would do if he were reelected.
O legislationtitled “Tax-Free Tips Act of 2024,” it seeks to eliminate federal income and employment taxes on service workers’ tips.
“As the cost of living continues to rise, working men and women in the service industry, many of whom may be working a second job to make ends meet, should be allowed to keep every dollar of tips they earn,” he said. Gaetz. in a statement.
Massie supported Gaetz’s statement, saying, “Tips tax is regressive and goes against American tradition.
He added: “But now digital payments allow the government to tax all transactions, even those that have historically not been taxed.”
The announcement came after Trump told a rally in Las Vegas that hotel workers and other service industry employees should “be very happy” because if he is re-elected this fall, “we will not be taxing tips.”
The former president said tax tips have been “a point of contention for years and years and years.”
Changes to income taxation charged would require Congressional approval. Lawmakers will review the nation’s tax policy next year, after Trump’s 2017 tax cut bill expires.
Currently, service industry workers report their taxes to the IRS, which views tips as regular taxable income.
GOP senators praised Trump’s idea, with Sen. Kevin Cramer (R-N.D.) referring to it as “genius.”
Not everyone was excited, however. The Committee for a Responsible Federal Budget has estimated that reducing tip taxes would lead to a $150 billion to $250 billion decrease in federal revenue over a ten-year period.
This story originally appeared on thehill.com read the full story
