Both former President Trump and Vice President Harris have called for eliminating the tip tax. The idea is popular, but has economic consequences.
JUANA SUMMERS, OWNER:
Presidential candidates Donald Trump and Kamala Harris both touted plans to eliminate the tip tax during recent campaign stops in Las Vegas. The strategy is aimed at appealing to a key constituency in a swing state where the service industry employs more than a quarter of the workforce. For more on the real economic impact it would have and how service workers are taking it, listen to KNPR’s Christopher Alvarez.
CHRISTOPHER ALVAREZ, BYLINE: In a complex in southwest Las Vegas, workers at the Spanish-Italian fusion restaurant Anima are preparing for their dinner rush. Bryan John is 36 and has been a waiter in Las Vegas for nearly 12 years. John says tips are crucial to his livelihood, and he thinks not taxing tips would benefit him greatly.
BRYAN JOHN: I mean, tips are my livelihood, so you keep more money – more money in your pocket. We’re not just servants, you know? We’re human beings, and we deserve to be paid well, so that’s great.
ALVAREZ: But economists are less certain about the merits of the proposal. They say the impact of the measure might not be felt by a large group of tipped workers. A few miles north of the Anima restaurant near the Las Vegas Strip, patrons at GOAT Sports Bar play video games and watch a Dodgers game. Nick Valdovinos, a thirty-seven-year-old bartender and manager, said not taxing tips could actually hurt service workers.
NICK VALDOVINOS: But at the end of the day, if you’re trying to buy a house, buy a car, or buy anything where you need to prove income, it’s going to be difficult for you.
ALVAREZ: UNLV tax law professor Francine Lipman says Valdovinos has a point.
FRANCINE LIPMAN: Just by calling tips tips versus what they really are, which is income, compensation, wages, you can’t exclude that from your gross income. And it shouldn’t be taxed differently just because you call it by a different name.
ALVAREZ: Lipman argues that not taxing tips doesn’t address the real issue, which is hourly wages. She proposes raising the minimum wage not just in Nevada but across the country. In some states, tipped workers can earn a base wage as low as $2.13.
LIPMAN: But that goes right to the heart of the issue. Which is they’re not getting a living wage.
ALVAREZ: Still, the no-tip tax movement has some powerful allies in Nevada beyond the presidential candidates. The Culinary Union, which represents more than 60,000 hotel workers, has expressed support for the bill, along with the state’s two U.S. senators. For NPR News, I’m Christopher Alvarez in Las Vegas.
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