Policies - Tips and Taxes

[thyme4change]

Both Harris and Trump are pushing this “no tax on tips” policy and I hate it. My gut reaction is (1) this will just further tipping culture which I hate. As a generous person, I tend to be somewhat generous with tips - but the number of places and types of places I am expected to tip is staggering - and I am so sick of it. I would like to see policies that discourage tipping and increase pay for workers across the board. (2) Low wage workers already pay very little income taxes, but this would reduce taxes for some people who make decent money. Why should a dealer in a casino who makes $100k pay less in taxes than an office worker who makes $90k? (3) How does this work for places that have mandatory gratuity? Take 10 people to a restaurant and your 18% tip is added on. Can caterers reduce their prices to costs and then require a 50% tip? Someone suggested that money managers could switch their pricing model to be tipped instead of commission and now we have people making hundreds of thousands of dollars now paying taxes?

How do you feel about this policy.

I’m sure the devil is in the details- but in general I hate this policy. I found this article where the arguments are presented much better and much more educated.

www.salon.com/2024/08/17/experts-warn-and-harris-no-on-tips-proposals-would-invite-serious-gaming-of-the-system/

Vice President Kamala Harris and former President Donald Trump have both proposed axing taxes on tips as they ramp up their presidential bids. But, even if the idea sounds appealing in theory, tax experts say a policy making tips tax-free wouldn't be all that helpful to workers in tipped occupations in practice.

Neither of the two major-party candidates have detailed their visions for the tax-free tip proposals, which would first have to be approved by Congress. Their suggestions have also raised questions around whether and to what extent guardrails against fraud and abuse would be implemented and how much tipped income would go untaxed, according to CNN.

[pulmonarymd]

Add to this is that they won’t pay SS taxes. Makes SS finances worse, and their benefit in the future will be less. Those who benefit from this policy might be in for an unpleasant surprise in the future

I think tipping culture needs to be phased out. Restaurant prices in Italy and Spain were not higher than here and you did not need to tip. You also get more professional stall and less tax cheating. All in all a better way of doing things

[tallguy]

I would abolish tipping completely.  I cannot begin to tell you how much I hate the entire concept.  Make the price the price, stop pushing off your wage issues onto customers, and STOP ENCOURAGING AND ENABLING TAX FRAUD.  This causes a problem with my GF, who enjoys going out to restaurants.  I don't, not only because dining out is rarely worth the price, but because it encourages tipping culture.  I rarely choose to go except for special occasions and will now never go to an expensive restaurant. 

People have tried to make tipping rise from 10% to 15% to now 20, 25, or even 30% while the price itself has multiplied, in addition to extending it to many more positions and industries.  I refuse to even tip for counter service.  I will sure the hell never tip for takeout.  I won't have food delivered, and I generally don't engage services that require tipping.  I am not going to hurt those people by not tipping them, but if they are indirectly hurt by people such as myself opting out of the process, that's not my problem. 

Eliminating taxes on tips will of course make things worse.  The entire culture needs to go.        

[djAdvocate]

Aug 17, 2024 15:40:17 GMT -5 tallguy said:

I would abolish tipping completely.  I cannot begin to tell you how much I hate the entire concept.        

agree.  $15FMW.  discussion over.  

[Opti]

Aug 17, 2024 18:23:04 GMT -5 djAdvocate said:

Aug 17, 2024 15:40:17 GMT -5 tallguy said:

I would abolish tipping completely.  I cannot begin to tell you how much I hate the entire concept.        

agree.  $15FMW.  discussion over.  

Which is great for some places. That will not get you into a market rent apartment in NJ, most of NY and of course large swaths of CA, and the Seattle area. I make more than that, not by much mind you, and I am in very low-income territory to the ickiness that lies below that. And in affordable housing land most are built for families even though the majority of the population is singles and couples. It is extremely hard to find very low-income housing in NJ and even harder to actually make it in the housing lottery, on the list, get approved and actually move in.

[haapai]

Aug 17, 2024 13:57:55 GMT -5 pulmonarymd said:

Add to this is that they won’t pay SS taxes. Makes SS finances worse, and their benefit in the future will be less. Those who benefit from this policy might be in for an unpleasant surprise in the future

I think tipping culture needs to be phased out. Restaurant prices in Italy and Spain were not higher than here and you did not need to tip. You also get more professional stall and less tax cheating. All in all a better way of doing things

I'm not so sure about that.  I was under the impression that only exempting tips from federal income taxes was being proposed.  I'll have to read more. 

If the proposal also includes not having to pay "both halves" of social security and medicare on tipped income if you make the federal minimum wage for tipped employees, the door has been opened for a heck of a lot of money laundering. 

[thyme4change]

Aug 18, 2024 7:22:05 GMT -5 Opti said:

Aug 17, 2024 18:23:04 GMT -5 djAdvocate said:

agree.  $15FMW.  discussion over.  

Which is great for some places. That will not get you into a market rent apartment in NJ, most of NY and of course large swaths of CA, and the Seattle area. I make more than that, not by much mind you, and I am in very low-income territory to the ickiness that lies below that. And in affordable housing land most are built for families even though the majority of the population is singles and couples. It is extremely hard to find very low-income housing in NJ and even harder to actually make it in the housing lottery, on the list, get approved and actually move in.

It’s a minimum - theoretically, the market should push up wages if people refuse to work for that little.

But, capitalism is not a perfect system due to the imbalance of power - so, people work for way less than they should because their options are limited.

[Opti]

Aug 18, 2024 12:23:01 GMT -5 thyme4change said:

Aug 18, 2024 7:22:05 GMT -5 Opti said:

Which is great for some places. That will not get you into a market rent apartment in NJ, most of NY and of course large swaths of CA, and the Seattle area. I make more than that, not by much mind you, and I am in very low-income territory to the ickiness that lies below that. And in affordable housing land most are built for families even though the majority of the population is singles and couples. It is extremely hard to find very low-income housing in NJ and even harder to actually make it in the housing lottery, on the list, get approved and actually move in.

It’s a minimum - theoretically, the market should push up wages if people refuse to work for that little.

But, capitalism is not a perfect system due to the imbalance of power - so, people work for way less than they should because their options are limited.

I wish tipping would disappear in many areas, however, for those who are servers in good places ... they can easily make $50K or so a yr. while being paid a very small nonliving wage. I have a friend who has done this for years and owns a home in a cheaper section of the state we both grew up in. They are already supposed to report tips. I admit I haven't done any reading on this yet, but my guess is the GOP position is to make it easier on employers and the Dem position is likely to favor some workers at least a bit. 

I think currently $15/hr is the minimum wage for NJ. However, that does not apply everywhere and grocery stores and similar are excluded. My local grocery chain starts people at $14/hr which is legal. The only way to start higher is to work a night or overnight shift. And generally employers who employ less than 50 people are not subject to these laws anyway.

Because of the Covid times debacle, less than a year ag minimum wage in nursing homes was set at $18/hr minimum. So even though I have gotten decent raises, I am still behind compared to my old job.    I haven't read the law but peeps I am still in contact now make $18/hr or more. And these are frontline positions, starter if you will, although good luck hiring in without experience.

[Opti]

It’s a minimum - theoretically, the market should push up wages if people refuse to work for that little.

Market theory is so wrong on this and other things, I probably could get at least three PhDs alone exploring that. We all know what happens, they can't hire for what they want to pay so they explore more automation. Which will work for a while until things need fixing and its more than just turning it off and on.

The world is starting to return to normal post Covid but there are many things out there that blew up like Putin and Hamas.
Remains to be seen what will happen with both.

[busymom]

As someone who waitressed for a time while taking college classes, an increase in FMW would be a much better option.


Now it has been a "few" years, but I got out of it because I worked at a restaurant in a rich suburb, and I quickly learned that a lot of rich folks are cheap.  Like nasty-cheap.  The rules on tips at the time (which the restaurant enforced, I didn't know if it was actually a law) we had to write down a minimum fixed amount at the end of our shift on how much tip money we got, whether we hit that amount or not.  So, I actually had shifts where I was paying taxes on money I never got in tips.  I quickly bailed, between the unfair taxation, and crazy hours (I was trying to pass my college classes, and this place wasn't helping).  You couldn't pay me enough, nope even FMW wouldn't be enough to get me back doing waitressing again.  

[Opti]

Somewhat OT, I discovered the maker of my non dairy chocolate chip cookie mix and chocolate cake mix is based in NJ and NY.
So at least some of my nondairy options are protected no matter what war atrocities Israel and Hamas commit. I do feel bad for citizens of both areas who just want to simply live.

[Opti]

Aug 18, 2024 12:55:07 GMT -5 busymom said:

As someone who waitressed for a time while taking college classes, an increase in FMW would be a much better option.


Now it has been a "few" years, but I got out of it because I worked at a restaurant in a rich suburb, and I quickly learned that a lot of rich folks are cheap.  Like nasty-cheap.  The rules on tips at the time (which the restaurant enforced, I didn't know if it was actually a law) we had to write down a minimum fixed amount at the end of our shift on how much tip money we got, whether we hit that amount or not.  So, I actually had shifts where I was paying taxes on money I never got in tips.  I quickly bailed, between the unfair taxation, and crazy hours (I was trying to pass my college classes, and this place wasn't helping).  You couldn't pay me enough, nope even FMW wouldn't be enough to get me back doing waitressing again.  

If you are in a base chain restaurant, I think it is quite hard. TGIFs, Applebee's, Ruby Tuesday etc. And in addition to what you wrote there is that subset of alleged Christians who think leaving tracts behind count as tips. As an underfunded person for too many years, I did pickup for the times I did get restaurant food. I don't want to take a table away that might be used by someone who can and will tip. 

Its rare in my small area to not see tip jars even at places like McDonald's if you order inside. That though at least is optional. 
I think its a special person who can waitress or serve well. 

[busymom]

I think another problem with waitressing is everyone thinks they are "swimming" in tip money.  I've only met one waitress who made seriously good money, and she was working at a place that served alcohol.  Most other waitresses I knew were living right on the edge, and often had more than one job.  It's a starter job, not anything you'd want to stick with, unless you own the restaurant.  

[djAdvocate]

Aug 18, 2024 7:22:05 GMT -5 Opti said:

Aug 17, 2024 18:23:04 GMT -5 djAdvocate said:

agree.  $15FMW.  discussion over.  

Which is great for some places. That will not get you into a market rent apartment in NJ, most of NY and of course large swaths of CA, and the Seattle area. I make more than that, not by much mind you, and I am in very low-income territory to the ickiness that lies below that. And in affordable housing land most are built for families even though the majority of the population is singles and couples. It is extremely hard to find very low-income housing in NJ and even harder to actually make it in the housing lottery, on the list, get approved and actually move in.

it is great in most PLACES.  it is not great in some places.  in those places, it will take two incomes to make that work to get you into a cheap apartment.  here in metropolitan CA, you can get a small apartment for around $2k/month, which is exactly what that wage floor would provide for TWO working people.  like NJ, CA also has a minimum wage that is above the suggested amount.

[djAdvocate]

Aug 18, 2024 13:07:04 GMT -5 busymom said:

I think another problem with waitressing is everyone thinks they are "swimming" in tip money.  I've only met one waitress who made seriously good money, and she was working at a place that served alcohol.  Most other waitresses I knew were living right on the edge, and often had more than one job.  It's a starter job, not anything you'd want to stick with, unless you own the restaurant.  

i would add that some people just like the work.  me personally?  i hate it.  i hate anything that is "front facing" with the public.  i am terrible with repeated and stupid questions.  it works against me as a sales-person.

[djAdvocate]

PS:

i don't know if it has been discussed in this tread, but the tip law that Trump is advocating is quite different from the one that Harris is advocating.

[Opti]

Aug 18, 2024 13:07:04 GMT -5 busymom said:

I think another problem with waitressing is everyone thinks they are "swimming" in tip money.  I've only met one waitress who made seriously good money, and she was working at a place that served alcohol.  Most other waitresses I knew were living right on the edge, and often had more than one job.  It's a starter job, not anything you'd want to stick with, unless you own the restaurant.  

It so depends on scheduling and local conditions. Very few people get that. My friend basically works Friday through Sunday right now. She's had some bad falls over the years and is still recovering from the last one. But as you know this is a no work no get paid kind of job. Chefs and above might have slightly better benefits but I do not even know if that is true. 

[Opti]

Aug 18, 2024 13:10:57 GMT -5 djAdvocate said:

Aug 18, 2024 7:22:05 GMT -5 Opti said:

Which is great for some places. That will not get you into a market rent apartment in NJ, most of NY and of course large swaths of CA, and the Seattle area. I make more than that, not by much mind you, and I am in very low-income territory to the ickiness that lies below that. And in affordable housing land most are built for families even though the majority of the population is singles and couples. It is extremely hard to find very low-income housing in NJ and even harder to actually make it in the housing lottery, on the list, get approved and actually move in.

it is great in most PLACES.  it is not great in some places.  in those places, it will take two incomes to make that work to get you into a cheap apartment.  here in metropolitan CA, you can get a small apartment for around $2k/month, which is exactly what that wage floor would provide for TWO working people.  like NJ, CA also has a minimum wage that is above the suggested amount.

The problem is some of those working people are older like myself, and there aren't easy ways to link up and become roommates once you are past 40, 50 and beyond. The wait list for one local senior housing center is three years per an older friend of mine. So only slightly better than affordable housing in general here. 

Maybe its me, but I think if you are working FT you should be able to afford something on your own. Even studios in this area are more often than not more than $2K/mo. Shit tons, maybe more new housing has been built in my general area in hopes the rich and NYC commuters will move in. These generally run from $2500/mo. to considerably north of $4K/mo. The largest units are 3 bedrooms. Parking is extra of course.

[djAdvocate]

i'm aware of the pricing.
this is part of a deeper discussion.
i am just stating that two incomes will fix the issue.
that is one of many possible solutions, but it is the one that is most accessible to a person LIKELY to be working at FMW.

[resolution]

Aug 18, 2024 13:13:16 GMT -5 djAdvocate said:

PS:

i don't know if it has been discussed in this tread, but the tip law that Trump is advocating is quite different from the one that Harris is advocating.

From what I read, Harris's tip law would have an income limit, so the rich wouldn't be able to convert their income into tips to avoid taxes.

Trump's law wouldn't have an income limit and would allow employers to keep the tips instead of giving them to the employee. However, when I tried to find out more information on that aspect of Trump's plan, it just kept bringing up links to the rule change that he tried and failed to get through during his first term.

[dondubble]

My most expensive 2 BR apartment is $1750/mo. The minimum wage in that small city is $16.28/hr. So for two occupants working at that wage it’s, $67,700/yr. That would yield a 31% debt ratio with no monthly debts. So plenty of room left for CC charges, a student loan, maybe a car loan.

[djAdvocate]

Aug 18, 2024 13:56:57 GMT -5 resolution said:

Aug 18, 2024 13:13:16 GMT -5 djAdvocate said:

PS:

i don't know if it has been discussed in this tread, but the tip law that Trump is advocating is quite different from the one that Harris is advocating.

From what I read, Harris's tip law would have an income limit, so the rich wouldn't be able to convert their income into tips to avoid taxes.

Trump's law wouldn't have an income limit and would allow employers to keep the tips instead of giving them to the employee. However, when I tried to find out more information on that aspect of Trump's plan, it just kept bringing up links to the rule change that he tried and failed to get through during his first term.

this is exactly what i read.
the Trump law would basically put the tip money in the hands of the employers.

i am not sure what everyone here thinks, but this is precisely the OPPOSITE of what i hope for when i tip.  i want the tip to ONLY end up in the hands of the person i am tipping.  and i get that the way tips are treated have changed in the last couple of decades, but i don't LIKE THAT.  and the Trump tip plan makes what i don't like part of the law.

so, yeah, i don't want any part of that.

[Opti]

Aug 18, 2024 13:57:49 GMT -5 dondubble said:

My most expensive 2 BR apartment is $1750/mo. The minimum wage in that small city is $16.28/hr. So for two occupants working at that wage it’s, $67,700/yr. That would yield a 31% debt ratio with no monthly debts. So plenty of room left for CC charges, a student loan, maybe a car loan.

In a side note, Gov Murphy suspended the property tax cap due to pressures from shore towns. Some like I think Tom's River are going from the 2.5% increase cap to 7%. This area is where much of NJ's senior housing is because it was cheap and relatively safe. 
I think the Governor should have done a new temporary cap based on multiples of the prior cap. I don't know what he knows, so I would have gone for max of 5%, twice the cap for a period not to exceed two years. Certain towns like Tom's River have really exploded in population and like many places, the school infrastructure was ignored or barely maintained during the Covid times. Things are not as ugly here as FL, but its not good. 

If I wanted to find a 1 bedroom apt here for $1750/mo I would need to go through private landlords. In other words, there are no complexes near me at all at that rate or below unless they are affordable housing or someone renting out part of their home. Most private condo rentals are way north of that. Although to be fair its possible if I were willing to live and work in downtown Newark or Elizabeth NJ there might be something. People also regularly get killed and robbed in those areas. And one bedrooms at the price from private landlords would have interesting features like kitchens that on a good day might look like a studio kitchen. Refrigerators usually are small sometimes dorm size ... 

My rent isn't $1750/mo, its still below (barely) but only because I have been here so long, and the owner hasn't forced me out yet. The current owner or someone always whines about market rent, when I have any issue whatsoever like needing to pay late this time because my employer is way slow in getting disability payments to their employees. There is a one bedroom up for rent. It is close to $1900/mo. It is updated, but not in the most updated gray color scheme of some of the two bedrooms. Mine is original from when it was built except for part of the bathroom. I really need to submit photos as I am sick of the whining and stomping of feet. I have seen the interior of two of the other one-bedroom apartments and watched the transformation of the one below me. It will be work because they have a lot to do. If they did not use the super and maintenance man, they could probably do it easily in less than a month. They won't. 

Will trim this. Waiting for thunderstorms which will only want to come the minute I decide I want to do something outside that's not next to the building. 

[djAdvocate]

it is very hard to find anything in the Bay Area for that rate, but there are a few rare apartments. they are either tiny, or dumps.

[Opti]

When the Covid times came for real and people started moving to work from home or work somewhere else, as usual more NYCers came out to NJ in force. That last big wave was 9/11, although the credit crisis of 2006-2008 pushed a bunch here as well.

So there are pressures here that probably don't happen in parts of CA and elsewhere. Its going to be interesting to see what happens in FL. Housing there is probably the worst in the country in some areas. Add in the fact the low paid peeps who support all the tourism could lose their tips to greedy employers ...

[Opti]

Aug 18, 2024 14:58:05 GMT -5 djAdvocate said:

it is very hard to find anything in the Bay Area for that rate, but there are a few rare apartments. they are either tiny, or dumps.

I noticed some of my former peeps have moved to the NJ shore area and now work for themselves or are retired. I am not going to look at Morris County or Bergen County for price compares. Just entered a rabbit hole because of a video clip of Joe Piscopo on some Fox show. Chose to look up Alpine Valley, NJ. Mistake. 

[NastyWoman]

Aug 18, 2024 14:58:05 GMT -5 djAdvocate said:

it is very hard to find anything in the Bay Area for that rate, but there are a few rare apartments. they are either tiny, or dumps.

Once again you had me look and damn am I ever glad I have my fully paid off condo  - old as it may be. This entire region, with the possible exception of a few "you really don't want to go there" areas, would be out of reach for me as a rental. And I am not even touching the discussion of buying around here now with a ten foot pole

[haapai]

Aug 18, 2024 12:55:07 GMT -5 busymom said:

As someone who waitressed for a time while taking college classes, an increase in FMW would be a much better option.


Now it has been a "few" years, but I got out of it because I worked at a restaurant in a rich suburb, and I quickly learned that a lot of rich folks are cheap.  Like nasty-cheap.  The rules on tips at the time (which the restaurant enforced, I didn't know if it was actually a law) we had to write down a minimum fixed amount at the end of our shift on how much tip money we got, whether we hit that amount or not.  So, I actually had shifts where I was paying taxes on money I never got in tips.  I quickly bailed, between the unfair taxation, and crazy hours (I was trying to pass my college classes, and this place wasn't helping).  You couldn't pay me enough, nope even FMW wouldn't be enough to get me back doing waitressing again.  

I also waitressed briefly, but probably longer ago than you (1989 or 1990).  At that time, all tips were self-reported.  Some of my customers may have paid their tabs with a credit card, but they could not tip me when they signed that slip.  All of my tips were in cash and I was not required to report my tips to my employer or share them with busers, dishwashers, cooks, bouncers, or hostesses.  I cannot remember whether I was paid the state minimum wage or the federal sub-minimum tipped wage for the hours that I worked.  In theory, we were supposed to track our weekly tips on paper, possibly on a form that was provided for us to use and retain (but not actually file with our taxes). 

The more experienced waitress that I worked with on most shifts quickly took me aside and told me how much to report in tips.  I cannot remember what it was, but it was quite a bit less than I was actually being tipped.  I was really new to waitressing, green-as-goose-shit, and not good at it, but still getting a whole lot more in tips than what she was telling me that I should report when I filed my taxes. 

What I am trying to say here is that for the longest time, tips were entirely self-reported and that under-reporting them was rampant, expected, and egregious.  Your employers did not report how much food and drink you had served, so there was no way of imputing tips.  None of your tips were paid via credit card and had to be reported.  There was no mechanism for comparing the tips that you made to what others working for the same employer were reporting.  You could tell the tax authorities some real whoppers and not get called on it.

It kind of boggles my mind when I think of what kind of tax evasion was possible when I was young.  We could make shit up with absolute impunity.  Things might have changed a bit since then but closing things from wide open to ten percent of that still leaves the sinmadres with plenty of room to maneuver. 

[bean29]

I really need to use my CC more just to make sure these people are paying their fair share of taxes.  I have decided that if they charge a fee for using a CC, that amount will be deducted from my tip, and if employees don't need to pay taxes on tips, I will tip less, as I have to pay taxes on 100% of my income.  This seems to be a policy that will benefit only a small portion of the population, and it bound to anger many other taxpayers.