this post was submitted on 14 Aug 2024
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Why it matters: Typically, ideas like these are tough to turn into reality, but next year when the Trump tax cuts expire, Congress will likely pass some kind of new tax bill.

  • That creates an opportunity to put new policies in place, says Brendan Duke of the Center for American Progress Action Fund.

The intrigue: Where things start to get wild is outside the restaurant industry, as Americans try to figure out ways to classify more of their income as tips. Think bankers' bonuses or sales commissions — or even pay for a Substack writer or freelance podcaster.

  • The U.S. tax code already has different rules for different kinds of income — capital gains, for example, are taxed at a lower rate than payroll income.
  • When those kinds of divides happen, you create enormous incentives for people to game the system, says Howard Gleckman, a senior fellow at the Tax Policy Center.
  • Those kinds of shenanigans typically happen with higher earners — think of the carried interest tax loophole, for example.

For the record: An official from the Harris campaign said the policy would include "strict requirements to prevent hedge fund managers and lawyers from structuring their compensation in ways to try to take advantage of the policy."

  • Trump's campaign hasn't offered much in the way of detail.
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[–] snooggums@midwest.social 74 points 10 months ago (2 children)

For the record: An official from the Harris campaign said the policy would include “strict requirements to prevent hedge fund managers and lawyers from structuring their compensation in ways to try to take advantage of the policy.”

I'm sure they want to do that, but it will fail and be abused just like independent contract work, civil forfeiture, and everything else that has an intended specific use case that gets changed over time to be abused by the powerful. This approach will make it so anyone can claim a monetary exchange was a tip and put the burden on the government to prove it wasn't, which is just ripe for abuse the moment it becomes law.

Tips as someone's base income is a cancer on society. Just make companies pay living wages instead.

[–] Volkditty@lemmy.world 18 points 10 months ago

And those "strict requirements" would be written by lawyers and lobbyists for the hedge fund managers, so you know you can trust them.

[–] Buffalox@lemmy.world 11 points 10 months ago* (last edited 10 months ago) (1 children)

I'm pretty sure the Harris suggestion requires you are specifically working as a waiter and a few other specific job descriptions.
So the possibility for abuse by "the powerful" does not seem possible to do legally.
People can always cheat illegally, which can work for years, but there's a risk to be found out.

Personally I'm against making tips tax free, because it seems to be a bad solution to a problem of low wages in service industries.
But on the other hand, if it's not politically possible with a better solution, I guess it's better than nothing.

[–] mojo_raisin@lemmy.world 4 points 10 months ago* (last edited 10 months ago)

I'd like to see a multi-phase federal plan with the clearly stated ultimate goal to phase out tips. This plan should have clearly defined beginning, milestones, and end so that workers and businesses could plan around it and everyone would be on the same-ish page or at least know what's going on.

  1. Stop taxing tips on specific jobs/industries combined with bringing up the minimum wage for all workers to standard (no $2.50/hr wage for tipped waiters, etc).

  2. Start an educational program that talks about the history and effects of tipping culture and why this program is good to try to stop it

  3. Start a government program that encourages reduced tipping, promoting specific percentages (e.g. 10% for restaurant table service) to consciously try to move the culture, this should go along with an increase in minimum wage that effectively makes up for the reduced tip. Repeat this step if needed to slowly step-down from tipping culture into one based on labor appropriately compensated by the employers.

  • This will help people know what to expect on both sides of transactions
  • This can reduce negative feelings associated with not giving a large tip because you know this is all part of a plan and the employer is expected be following the law and increasing compensation.
  • This will provide cover for business to increase their prices accordingly, and simultaneously the government can put out guidance about how much prices should be expected to rise and how your total bill won't really change much.

The end goals should be clearly stated, something like

  • A person working 40 hours/wk at minimum wage should be able to afford a basic, clean, up-to-standard 1-bedroom apartment, food, and transport, and basic medical care.

Hopefully, culturally, tipping changes to be seen as like " 'the old way', weird old people like paying service workers to feel superior".

[–] mercano@lemmy.world 60 points 10 months ago (6 children)

I think this policy is a mistake. I think the US should be moving away with tipping, and this will just make it harder. European restaurants work this way and don’t seem to be suffering.

I hate having to judge a waitress, barber, or driver after receiving service then doing math on the bill. Worse yet is housekeeping at a hotel; you’re expected to leave them a tip when you don’t even know what kind of job they’re going to do. Just charge me on the bill whatever it costs to pay these people fairly and stop making me make up the difference.

[–] ravhall@discuss.online 9 points 10 months ago

I will charge $1 for software development, with a $10,000 tip.

[–] oxjox@lemmy.ml 4 points 10 months ago

European restaurants work this way and don’t seem to be suffering.

I was in London a couple months ago for my first trip to Europe. I'm still trying to figure out the economics of the pubs.

How are the servers at pubs being paid in a manner that they're able to live in or close to London? Aren't they paying significantly more in taxes than US workers? They all seemed very pleasant and gracious, presumably with the promise of a known paycheck. They really didn't have much to do other than pull a tap handle. The beers were all very reasonably priced (often 10-25% less than at American bars). I wonder if these pubs are subsidized in some way to keep the prices low and the wages reasonable. How are businesses taxed in London / Europe compared to the US? Perhaps higher wage taxes and lower business taxes means employers can pay their staff more?

The experience is still living in my head as if I had visited a land in a fairytale (or could just be because London).

My point really is that local economics would likely change drastically simply by making this one change. I know a lot of bartenders and servers - they make far more on tips than if they were paid a living wage. I don't know one person who would prefer an hourly wage. There's so many pieces to the puzzle that I'm not able to jot down right now but I wonder if the US could maintain the number of restaurants and bars it has if it were to shift servers to a salary.

[–] EvacuateSoul@lemmy.world 3 points 10 months ago (2 children)

People tip the housekeeper?

[–] WillBalls@lemmy.world 1 points 10 months ago (1 children)

I've never done it and now I feel bad :(

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[–] Maeve@kbin.earth 1 points 10 months ago

The industry standard in the nearest tourist trap near me is $7.25-8.00 to start. I'm in a red state, though.

[–] AA5B@lemmy.world 2 points 10 months ago

They should make this tax free because the current system criminalizes normal behavior. There’s a huge amount of tax fraud, yet not worth much in the grand scheme of things and not worth enforcement. This just means they are no longer criminals and the honest people are no longer punished for honesty in something where they realism can’t get caught.

[–] Xatolos@reddthat.com 2 points 10 months ago* (last edited 10 months ago) (1 children)

As someone who lives in the EU and travels to different EU (and the UK) countries, tipping is becoming a thing here.

Was just in Scotland, one place had mandatory 10% tip on the bill, another place "questioned" (complained) that the tip wasn't high enough for them. I've also seen it in other countries, typically on the machines to pay. I think it's because it's easy to put there and people are more likely to hit a yes option.

Isn't as high % expected as in the US and Canada, but it's showing up here.

[–] Eximius@lemmy.world 1 points 10 months ago

Funny how tipping and recession (UK) goes hand-in-hand.

[–] Melody@lemmy.one 1 points 10 months ago (1 children)

In general I don't usually tip because of this. It's not my place to pay them a living wage; it's the employer's job. If more Americans would take this stance and make it impossible for employers to hire at sub-minimum wages; this culture would go away.

I have to receive more than above-and-beyond service to even consider tipping; and then it's only when I have the funds to do so. I don't appreciate tipping pressure either; and I will actively not tip when people are pressuring me to do so; or when the execution of the transaction itself needlessly provides a prompt to tip when there's really no reason to tip anyone who doesn't care or provide more than their basic job in service.

Frequently there's no reason to tip in most service contexts; as there's no additional work being done; or assistance being asked of the employee. In some limited contexts there's justification for tipping; but it's very limited justification, and it really comes down to a couple questions: 'Did the employee provide a service that was far more exceptional than would be reasonably expected of them to perform', and, 'Was that performance given merely because it was asked or needed to accommodate you as a customer and your immediate and obvious needs'?

In some contexts, in some jobs, those opportunities to go above and beyond do exist. In those contexts...tip if you feel it's appropriate. In many other service jobs; the employer has brutally optimized and taken complete management over the efficiency and tasks being performed and; as such; they should assume the responsibilities of ensuring that an employee gets paid sufficiently, but also gets opportunity to get paid for reliable, superb or consistent superior performance.

[–] ByteOnBikes@slrpnk.net 9 points 10 months ago (2 children)

What sucks is your act of defiance only screws over the worker.

The employer got paid no matter what.

[–] jacksilver@lemmy.world 4 points 10 months ago

I get that, but also we shouldn't have 1/5 of the bill (if 25% tip) hidden behind an expected tip.

I hate the fact that taxes aren't required to be included with the price.

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[–] ignirtoq@fedia.io 46 points 10 months ago (2 children)

next year when the Trump tax cuts expire

It's worth repeating again that the middle class Trump tax cuts expire next year. The Trump tax cuts for the wealthy have no expiration date and are permanent.

Also, they're not "Trump" tax cuts but Republican tax cuts, but at this point the distinction doesn't really mean anything anymore since Trump has completely taken over the party.

[–] oxjox@lemmy.ml 11 points 10 months ago

I remember when this was signed. My jaw dropped when I read it while I knew it would get swept under the rug and forgotten about. I specifically said to myself, this is a ruthless attempt to set up the democrats to look bad after his first term.

This shouldn't be a surprise to anyone. We should be taking a very hard look at why it is.

[–] AA5B@lemmy.world 3 points 10 months ago

I just wish the exemption caps would also expire. While I never did the math, I think people like me paid more because of the stupid cap, regardless of the lower tax rate. It’s not just the wealthy who pay a ton of state and local taxes, but also many of us in high cost of living states. I’ve still been able to itemize, but now I can’t exempt state and local taxes so it doesn’t get me much. And I pay tax on the taxes I pay. Yay, double taxation /s

[–] someguy3@lemmy.world 32 points 10 months ago (2 children)

It means more and more businesses will try to become tipping businesses.

[–] sunzu2@thebrainbin.org 10 points 10 months ago

All of then are already trying.

I don't tip unless hair or food. And I tip cash. Fuck these "owners" haha

I never signed for paying cooks wages 🤡

[–] treadful@lemmy.zip 3 points 10 months ago

Then mandatory tips, and tip sharing with the CEO...

[–] SeaJ@lemm.ee 25 points 10 months ago (1 children)

No. Income is income. I also don't want to encourage businesses to have their employees really on tips.

[–] spyd3r@sh.itjust.works -1 points 10 months ago (1 children)

Shouldn't be taxed in income either

[–] SeaJ@lemm.ee 3 points 10 months ago (1 children)

Sorry that you hate the poor and middle class.

[–] spyd3r@sh.itjust.works 0 points 10 months ago (1 children)

The poor and middle class are the only ones paying income tax...

[–] SeaJ@lemm.ee 1 points 10 months ago
[–] Steve 18 points 10 months ago* (last edited 10 months ago) (1 children)

The more complicated things are, the easier they are to manipulate and abuse.

All wages, salaries, bonuses, tips, any cash given as compensation for labor performed, should all be taxed one way.

Any rents, capital gains, interest, anything gained by simply owning or selling something owned, should be taxed another way.

Any extraction of natural resources should be taxed a third way.

[–] SoylentBlake@lemm.ee 1 points 10 months ago* (last edited 10 months ago) (1 children)

But with tips, it's income from customers generosity, not pay from an employer. It's not guaranteed, in 99% of the cases, but gets taxed like it is which puts power over it into the hands of the employer, who has no business in the transaction.

By default, I am 100% against intrusion of extra parties unnecessarily, and this fits that bill. Providing the atmosphere tipping can occur doesn't mean the owner should be in charge of whether the culture tips or not. Are the power and water companies demanding tips from business owners? Or judges and protective services demanding tips from citizens? Their work enables the environment for their business to exist, ergo, same logic. Or doctors and nurses, they're work keeps people alive to even create industry.

Coming down on the tipped service worker is definition punching down. They work in services, that means their job already sucks, leave em be already and focus on actual issues.

[–] Steve 1 points 10 months ago (1 children)

it’s income from customers generosity, not pay from an employer.

It's pay for work. Who pays doesn't really matter.

It’s not guaranteed

It is once given. And if it isn't given, it isn't taxed.

power over it into the hands of the employer, who has no business in the transaction.

You should tip in cash when possible.
And there are already laws in place to prevent employers from fucking with peoples tips.

Are the power and water companies demanding tips from business owners? Or judges and protective services demanding tips from citizens? Their work enables the environment for their business to exist, ergo, same logic. Or doctors and nurses, they’re work keeps people alive to even create industry.

I have no idea what you're talking about here.

Coming down on the tipped service worker is [by] definition punching down. They work in services, that means their job already sucks. Leave 'em be already and focus on actual issues.

All jobs suck. Holding one to the same rules as all the others, isn't punching down.
And yes, that means they should be paid the same minimum wage. No special acceptation for "service workers".

[–] SoylentBlake@lemm.ee 1 points 10 months ago* (last edited 10 months ago) (1 children)

You have no idea what I'm talking about? It's said right there *ergo, same logic". There are two kinds of people in this world, those that can extrapolate with partial knowledge and those that.

You know exactly what I'm saying, you just don't care to define what's appropriate and where the line should be drawn. I think the whole thing is a giant nothingburger from a group of Karen's who think their opinion should decide peoples livelihoods, for some reason. Where's that end? America should return to its original motto on our currency, not today's In God We Trust, but the one Ben Franklin minted that said Mind Your Business.

Why should customers be relied upon to subsidize the restaurant owner? I'm in the PNW, all our restaurants/bars/etc pay min wage (or more) plus tips and they're doing just fine.

I used to work for tips and I averaged between $35-50/hr. If everyone decided to drop my income by 2/3rds, because that'd be fair to...whom exactly? The owner? Cuz if they have to pay workers the same as everyone else then servers should be happy with a pay cut to $15?

GTFO.

Most of the country already has a servers wage of 2.13/hr, and how that's not criminal is beyond my comprehension. Talk about government putting their fingers on the scale for an industry. That is essentially codifying a caste system. Well, so is all wage work in the corporatocracy. That's why we call it wage slavery.

You argue for cutting some people's wages by 1/2-2/3rds then don't be surprised if that's met with violence. Which I would call justified, honestly. Violence, at times, is a perfectly good solution. Maybe not the most highbrow, but it can be quite effective. Why do you think the state has a monopoly on it?

And i don't even want to see the strippers up there for $15/hr. What a sad world.

[–] Steve 1 points 10 months ago

I don't know what's going on. It seems you're arguing against things I never said.

Perhapse you're extrapolating too much, and arguing against a strawman. I'm a very literal person, who only means exactly what I say. When people make assumptions about what each other are "really" saying, they frequently talk pass each other, and don't actually communicate.

[–] phoenixz@lemmy.ca 16 points 10 months ago (1 children)

Just outlaw tipping. I HATE the tip tax, it only exists so that companies can cheat their customers and somehow they managed to convince some servers that it's a good thing

If you think about it, the entire idea is stupid. Just pay your servers an honest living, put realistic prices on your menus and you're done.

I don't tip my plumber, I don't tip my doctor, I don't tip my accountant, I don't tip the cook, but for some reason I have to tip the waiter?

Just pay the guy / gal an honest living and stop screwing over your customers.

I've been to places where tipping is required while starting at fracking 25%. What the frack? And tipping is spreading as well. Now I can tip my baker too for giving me the bread that I just paid for. WTF?

No.more tipping

[–] Freefall@lemmy.world 13 points 10 months ago

Tipping needs to die. It should AT MOST go back to being a "thanks for abnormally good service" bonus.

[–] Sgt_choke_n_stroke@lemmy.world 6 points 10 months ago

If no tax on tips gets passed does adding 20% to the bill not apply anymore? Like I'm gonna start tipping 14% instead.

[–] aniki@lemmings.world 6 points 10 months ago

Band-aid on a bullet wound. Thanks neoliberals!

[–] Devdogg@lemmy.ml 3 points 10 months ago

Like I paid taxes on the money I made while bartending....

[–] leadore@lemmy.world 3 points 10 months ago

If anyone is going to exploit a "no tax on tips" law, it's going to be high-income lawyers and hedge fund/high finance people, and the IRS will lose vastly more tax revenue from them than what they'd lose from service workers' tips.

So while it may sound nice, it's just another avenue for exploitation by the rich and not a good idea, Think about it: it's Trump who brought up the idea (which ofc some advisor gave him since he doesn't do ideas), and who do you think they are trying to benefit? Not service workers, we can be sure of that.

If we could just get rid of stupid tipping culture and pay a living wage that doesn't depend on tips but is accounted for in the prices, then we could also not track and therefore not tax tips, since they'd rarely be given, and even if they are they'd be in smaller amounts than the usual 15-20% or whatever, since the customer is not feeling a burden of providing their living but just wants to add a small monetary recognition for especially good service.

[–] TenderfootGungi@lemmy.world 3 points 10 months ago

It would reinforce it. Instead, do what several countries have done, and make tipping mostly non-existent.

[–] captainlezbian@lemmy.world 2 points 10 months ago

My stance comes down to either tipped workers are making enough to need to pay taxes or they aren’t. I see no reason to give a bartender a tax break yhat we wouldn’t give to a line cook or retail worker with the same take home pay.

[–] the_toast_is_gone@lemmy.world 0 points 10 months ago (2 children)

The fact that this is now apparently a bipartisan effort means either it's a good idea or a terrible idea. I'm leaning towards "good."

[–] Volkditty@lemmy.world 29 points 10 months ago (7 children)

I'm leaning towards horrible. If your tips are tax-free, I'm gonna cut your wages. What do you care? Go out there and make more tips! Shake that money maker, honey!

And why should waitresses and bar staff have all the luck? Doesn't everyone deserve tax-free tips? Tip your grocery cashier! Tip your nurse! Tip the guy at the bank who approves the loan you need to afford giving tips to everyone, as the weight of providing a living to everyone you interact with shifts away from the business owners and shareholders and onto your shoulders!

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[–] No_Ones_Slick_Like_Gaston@lemmy.world 14 points 10 months ago (1 children)

Not sure Rick.
Why would anyone's wages won't be subject to taxation while others are?
How can we prevent executives from instating "executive tips" that are not taxable ?
Is this a true effort to not get the people in service positions to get full salary and benefits?

[–] Buffalox@lemmy.world 7 points 10 months ago* (last edited 10 months ago)

A tip is not a wage. Companies that give lower wages because workers are also tipped are scumbags.

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