Trump: No Taxes on Tips!

A nonsensical proposal.

Memeorandum points me to the Fox Business report, “Trump encourages voters to write ‘no tax on tips’ on restaurant receipts.”

Former President Trump on Friday encouraged his voters to write on restaurant receipts to spread the word of his proposal to eliminate taxes on tips.

Trump made the remarks at an event celebrating his 78th birthday in West Palm Beach with members of Club 47.

The former president told the crowd that as part of his plan for further tax cuts, he would eliminate taxes on tips for “restaurant workers, hospitality workers and anyone else that gets tips.”

“No tax on tips, okay? It’s done. Done. And we need to spread the word so that every time you leave a tip for the next five months, you put on the receipt, vote for Trump, because there’s no tax on tips,” Trump said.

[…]

Trump told the crowd Friday that restaurant workers, hotel workers, and caddies would most benefit.

“I think it’s going to be a great thing. You know they earned it,” Trump said, adding: “somebody does a good job is supposed to pay tax on it. So, we’re ending that immediately, effective immediately when we get in.”

This is just weird, no?

As a campaign stunt, it’s a bit odd, but at least it makes sense. Millions of people receive tips as a major, if not the major, source of their income and might well be persuaded to vote for Trump if they thought it would eliminate taxes on that income.

But, as a matter of public policy? Why would tipped workers be treated differently than others?

Leaving aside whether people receive tips because they did “a good job”—most of us tip out of obligation, with very little consideration of performance—but, presumably, most workers who get paid do sufficiently well at their job to keep it. So, if making money for good performance shouldn’t be taxed, most income should be excluded.

If the idea is that tipped workers tend to make relatively little money, then increase the standard deduction so as those making below whatever threshold we’re trying to buffer from federal taxation are excluded. There’s no obvious reason why a waiter or cabbie (much less a caddy) should pay taxes on a differential basis from a checkout clerk or janitor.

This part was also odd, but very Trump:

“I have announced that I will eliminate taxes on gifts for restaurant workers and hospitality workers. And anyone else who relies on tips, no more taxes on tips! None,” Trump said, noting that Kid Rock had taken up the suggestion to write on restaurant receipts.

Kid Rock shared a picture of his receipt from Jeff Ruby’s Steakhouse, for which he left a $400 tip.

“A vote for Trump is a vote for no tax on tips!” the musician wrote.

Rep. Marjorie Taylor Greene, R-Ga., also shared a post on X, showing a photo of her receipt for which she left a $120 tip.

https://twitter.com/mtgreenee/status/1801802547864223838

“Vote Trump! No tax on tips!!” Greene wrote on the receipt.

I’m not sure that Kid Rock, much less MTG, is a major influencer on undecided voters. And most folks would look at these receipts and wonder how they managed to spend so much money on a single meal. (Rock’s receipt includes 5 filet mignons, so presumably, he had a large party.) Rock is also a much more generous tipper than Greene.

FILED UNDER: 2024 Election, Taxes, US Politics, , ,
James Joyner
About James Joyner
James Joyner is Professor of Security Studies at Marine Corps University's Command and Staff College. He's a former Army officer and Desert Storm veteran. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Charley in Cleveland says:

    Trump didn’t (doesn’t) want to listen to 4-star generals and intelligence pros, but he is happy to take advice from Kid Rock. He’s telling servers and oil execs he will cut taxes (i.e., reduce revenue) while his cult in Congress is howling about the deficit…which apparently only matters when a Dem is in the White House. If the mainstream media could stop obsessing over Biden’s age it might find it interesting to focus a bit on Trump’s lunatic ravings.

    13
  2. Bob@Youngstown says:

    Next promise:
    No tax on bonus!

    5
  3. Chris says:

    Okay… Trump has made tax cut overtures to oil companies and waitresses/waiters… my bet is that by the time he’s done using up all our oxygen to bloviate I’ll be the only one paying taxes.

    11
  4. Sleeping Dog says:

    Felon trump is also floating the idea of eliminating the income tax and replacing it with tariffs on imports. One doesn’t need to go far down the trail of potential consequences for such an action to see the fallacy. But a higher level consequence is the result would be a wholesale shift of who would pay the tax from the well to do, to the poor and working class.

    4
  5. Michael Reynolds says:

    I was waiting tables at Middleton Tavern in Annapolis when Reagan changed the taxation of tips. In the pre-computer age we would declare our tips, voluntarily. New waiters were informed by other waiters about how much they should declare. The short answer: not much. Every restaurant I’d work for we’d form a conspiracy to under-report. Then Reagan changed the rules so we were tipped on an assumed level of tips, 8% IIRC. We were pretty bitter.

    This ploy might work, a little, in Nevada. A lot of waiters here. Fortunately most are unionized and I imagine union leadership will call bullshit.

    3
  6. OzarkHillbilly says:

    My waiter son sure would appreciate that. Not sure he should be in charge of tax policy tho.

    3
  7. Scott O says:

    If Kid Rock doesn’t want waiters to pay tax on their tips he could have tipped 15% on the card and left the rest in cash.

    5
  8. JKB says:

    So it is desirable to transfer the student loans of those who go to college to the hospitality and restaurant workers, but just terrible to think of not taxing every gratuity those workers might receive?

    Ironically, those with the economically-worthless college degrees often are also working for tips. Of course, the “forgiveness” of student loans isn’t really for the student, but to rather to keep the fetish of college alive so the faculty and administrators can keep bleeding the younger generations dry.

    I mean really what if the college professor has to start working for tips to save on income taxes? How gauche!

    It is bad enough that the graduated income tax forced the salaried professor of 1950 to have given up the servants his 1900 counterpart could afford with ease as well as move into a more cramped abode.

  9. JKB says:

    @Sleeping Dog:

    Customs duties kept the federal government funded, but small for the first 130 years.

    Not until 1917 did the income tax yield as much money to the federal government as customs duties did. But by 1920 it was contributing ten times as much money as the customs; and that was only the beginning of the rise of the graduated income tax to a predominant place in the financing of a hugely expanded government, and to an important place among the instruments for the redistribution of wealth in America.

    –Allen, Frederick Lewis. The Big Change: America Transforms Itself, 1900–1950 (1952)

  10. Kathy says:

    @Sleeping Dog:

    Felon trump is also floating the idea of eliminating the income tax and replacing it with tariffs on imports.

    Aside the fact this would contravene a myriad trade agreements, and that the US imports a LOT of goods from all over the world, it shows an astonishing degree of ignorance.

    Income taxes were first instituted in the US when the civil war got underway, because tariffs did not produce the revenue needed to finance the army required to fight the war. And since then, government expenditures have grown a great deal. The tariff rates needed to fund all that would be ruinous.

    Of course, the purpose might be to defund all that. And to destroy international trade as well.

    5
  11. Robert in SF says:

    Is there a way to estimate what the flat-tax on *all* personal income would have to be to match current government income tax amounts. This is to replace the current income tax structure, not taxes on businesses (yet?).

    All income would be broadly interpreted: capital gains, W2, 1099, inheritance in cash and liquid assets (?), and compensation like ‘carried interest’ (?). Is there even a metric for how much income there is for people each year to use in the calculation?

    1
  12. Michael Reynolds says:

    @Robert in SF:
    How about this as a starting point. The US budget is ~6 trillion. The population is 330 million. That comes to about $18,000 a head. Pricey for a family of four.

    The GDP is around 25 trillion so in rough numbers we need a tax rate of about 24%. This isn’t counting borrowing, just the expenses we admit to. If every part of GNP was taxed at a flat 25% we’d be able to pay our bills. Caveat: I am math illiterate.

    5
  13. Sleeping Dog says:

    @JKB:

    That was then, this is now.

    Federal Income Tax receipts are about $2.01T, current imports are about $3.82T annually, to replace the income tax with tariffs would require a tariff rate of about 53% or put another way, increase the cost of imported goods for the consumer to $5.84T. Think of what that will do the cost of your, Made in China, MAGA hat.

    8
  14. steve says:

    As his campaign progresses we can expect him to make more promises not to tax the group to whom he is talking. This will mostly be groups who have already sucked up to him in some way.

    Steve

    4
  15. Andy says:

    I don’t think this is weird at all – it’s pretty smart. Tax cuts to a segment of the working-class population, especially at a time when tipping has expanded to just about everything.

    Now what will Democrats do -argue against a tax cut for a huge number of working class people? How is that going to work out politically?

    4
  16. DrDaveT says:

    How about we start by not caring how the income was generated when we tax it? Wages, tips, short-term capital gains, long-term capital gains, interest, dividends, … it’s all just income, and your taxes depend only on the total.

    …and then if JKB thinks that certain groups (e.g. student loan debtors or billionaires) deserve a break on their taxes for policy reasons, we can make that explicit and write it into the tax code.

    6
  17. Jc says:

    Why not eliminate the tipped minimum wage and make the federal minimum wage the new floor for tipped minimum wage? Or increase both like we have done in Virginia.

    4
  18. Michael Reynolds says:

    @Andy:
    It’s dangerously smart, at least here in Nevada where just about everyone is tipped – waiters, dealers, cab drivers, cleaners, Door Dash, Instacart, Uber. . . Unworkable in the long run as we’d suddenly see all sorts of new ‘opportunities’ for tipping. There’d be a backlash – why am I tipping a guy a C-note if he’s not even participating in the tax system – but no way of knowing how much effect that might have and it would take a while to have a noticeable effect.

    Of course only a fool would believe Trump would follow through.

    4
  19. Michael Reynolds says:

    @Jc:
    I don’t think anyone who earns tips wants to swap them for a minimum wage. I would certainly never have done the job for minimum wage, even an elevated minimum wage. And the quality of service – which we excel at – would decline drastically.

    1
  20. Gustopher says:

    Do we make this revenue neutral by increasing capital gains taxes? I’d be ok with that.

    5
  21. Andy says:

    @Michael Reynolds:

    Yeah, it’s a promise he can’t deliver that’s objectively bad policy. But it could be effective politically, especially among low-info voters who don’t pay attention to politics, which is probably a lot of these workers.

    3
  22. Bob@Youngstown says:

    @Sleeping Dog:

    also floating the idea of eliminating the income tax and replacing it with tariffs on imports.

    Does anyone remember what happened to the price of Harley-Davidson motorcycles when Trump increased the tariff on steel? (hint: “price inflation”)
    In the meanwhile I’ve not heard of any new US steel plants being opened (which was Trump’s stated objective)

    Corporate earnings may or maynot “trickle down”, but tariffs are assured to trickle down to consumers.

    2
  23. Gustopher says:

    @Andy:

    But it could be effective politically, especially among low-info voters who don’t pay attention to politics

    I have a sinking feeling the election will be lost because a tiny slice of very low information voters think Biden overturned Roe v. Wade because it happened on his watch.

    5
  24. Kathy says:

    @Michael Reynolds:

    I see a reduction in tip amounts more likely as people figure “well, they are not taxed for this, so they don’t need as much.” Add inumeracy, and a regular 20% tip might become 10% or even lower.

    @Michael Reynolds:

    I think many experiments in eliminating tips have ended in tips being reinstated.

    I wonder what that means. It may mean tipping is better for employees, or it may mean it’s the least worse option, given the overall US economic system.

    As I understand, tipping is less common in Europe, and the amounts tipped tend to be far lower (with lots of regional variations). My reading indicates tipping is considered impolite in Japan.

    2
  25. DrDaveT says:

    @Bob@Youngstown:

    Does anyone remember what happened to the price of Harley-Davidson motorcycles when Trump increased the tariff on steel? (hint: “price inflation”)

    Technically, “escalation” or “real price growth”. Inflation is changes in the purchasing power of a dollar in the general economy; specific goods escalate (or not) relative to that.

    In the meanwhile I’ve not heard of any new US steel plants being opened (which was Trump’s stated objective)

    Nor will you. This is part of the undeliverable promise of Trumpism — not only will we undo the last century of gains in racial and gender equality, but we will also undo the last 50 years of globalization and offshoring and developing world development and reestablish competitive (if not dominant) US manufacturing across a wide range of now-moribund industries. This will be accomplished via the irresistible force of Trump’s scowl.

    Corporate earnings may or may not “trickle down”, but tariffs are assured to trickle down to consumers.

    Yup. If Trump stands for anything, it’s regressive taxation.

    4
  26. Wr says:

    @Andy: Dems will probably do the smart thing and instead of this gimmicky and probably unworkable tax cut will demand the end of the “tipped minimum wage.” Why should the American people pay so that business owners can get away with paying a tiny fraction of what other businesses pay?

    3
  27. Wr says:

    @Michael Reynolds: I don’t think JC is suggesting a swap. Tips PLUS actual minimum wage instead of tips plus two bucks an hour. My guess is that taxes on tips don’t generally come to five to fifteen dollars an hour.

    1
  28. Wr says:

    @Michael Reynolds: I don’t think JC is suggesting a swap. Tips PLUS actual minimum wage instead of tips plus two bucks an hour. My guess is that taxes on tips don’t generally come to five to fifteen dollars an hour.

  29. Bob@Youngstown says:

    @DrDaveT:

    specific goods escalate (or not) relative to that.

    I see your point, but what I should have said was “cost escalation”. The increased cost of steel (resultant of the steel tariff) caused HD to publicly state that they had to increase the asking price of their products IIRC.
    Mower manufacturers, makers of chain link fencing, etc all saw the price for raw materials rise in response to increased tariff on steel. The public recognized it as “inflation”

    2
  30. Just nutha ignint cracker says:

    @Sleeping Dog: And remember, JBK is probably easily as concerned about corporate taxes as personal ones. “Confiscation of shareholder assets/profits” and all that (and double taxation, if he’s thinking creatively enough). I doubt that tariffs would be able to finance the government adequately (given that personal and corporate income taxes + tariffs + other revenue sources–licenses, fees, etc.–don’t adequately finance it even now*). Tariffs is just part of the tax protest shell game, as is flat tax, value added tax, and all the other alternatives. It’s about transferring the cost of government onto “you” and away from “us.”

    *We’re still running deficits annually, right?

    2
  31. Just nutha ignint cracker says:

    @Gustopher: Ouchies! That’s gonna leave a mark!

  32. Just nutha ignint cracker says:

    @Kathy: Given that a “good” tip was 15% at the time Reynolds was stealing from his boss at the pizza joint (?), I’d say that’s a good guess. And a “what’s wrong with this picture” exercise, but I won’t bring that question into play.

    ETA: “Tipping is impolite…” is true in Korea, too. The explanation I’ve heard was that leaving a tip is a sign that you don’t think the owner knows how to run a business–in the case of a small “mom and pop” operation–or that you think the owner is unwilling to pay his employees enough/what the job is worth in the case of large places. Fortunately, because of our Calvinist underpinnings in the US, our “moms and pops” and owners aren’t sensitive about such assumptions by the public and our tipping culture is stronger than ever.

    1
  33. Kathy says:

    Let’s not leave out creative legislating.

    I can imagine a law crafted that this would apply only to tips left electronically or in a credit card charge, not to cash tips. Also, that the tips are paid to the restaurant/hotel/casino/cab company, not the employees. They’d have to transfer the tips to employees, but these now qualify as income and are taxed accordingly.

    You know, as what happened to the ballot measure in Florida to allow ex convicts to vote.

  34. Scott says:

    @JKB: The reason we had a constitutional amendment to enable income taxes is due to the prohibitionists. Prior to prohibition, a lot of federal taxes came from alcohol sales. The prohibitionists realized that needed to replace that revenue and therefore campaigned and won for the Sixteenth Amendment to the Constitution which was ratified on February 3, 1913. It granted Congress the authority to issue an income tax without having to determine it based on population.

    If you want a good historical read on the campaign to ban alcohol, read Last Call: The Rise and Fall of Prohibition by Daniel O’Krent. Came out in 2010.

    2
  35. Michael Reynolds says:

    @Kathy:
    Yep, credit card tips are paid to the restaurant, many of which pocket some portion of them, and dole out whatever’s left to waiters, busboys and bartenders. When I was waiting tables it was still mostly cash, hence the need to ‘declare’ a frankly ludicrous amount to the IRS.

    Taxing tips has a side effect of creating a feeling among staff that the house isn’t really paying them anything. After taking out taxes on tips you’d often get a paycheck of 2 or 3 dollars a week.

    I know people dislike tipping in general, but ask any Brit to compare service in an American restaurant to what they see back home. US service is far superior at every level. If I go to a place like Robuchon the tip could easily be $300, and that ain’t minimum wage. If the guy turns just three tables a shift he can gross a grand, pay out to busboys and bartenders and walk with $600 a night, which, if he’s pulling even just four shifts a week is in the neighborhood of 120K. If you’re good and a hard charger you pick up shifts at other restaurants as well, so that can add more. Obviously, your Denny’s waitress isn’t making that.

    The sweet spot is probably a place like Morton’s, not Robuchon. At the very high end you’re not turning a lot of tables, but at a steak place the service is less demanding, while the check totals are still high.

    3
  36. Jax says:

    My youngest has her first “restaurant” job this summer. They’re paying her pretty good, $14 an hour for back of house, plus tip sharing. It’s at an old school “drive in”, people come in, park their cars like Sonic, but they come up to the window to order because the old school intercoms for each parking spot don’t work yet.

    We’re so food-starved around here, we have one Mexican restaurant, a bar and grill, and a taco truck. They’ve been busy as hell at the new/old drive-in. She’s really learning a lot, and I’m glad they’re paying well!

    1
  37. Just nutha ignint cracker says:

    @Wr: And in a related development…

    After five years of planning, Waffle House says it is raising the base salary of its workers—to $3 per hour.

    The company will set the new floor for base pay this month, gradually increasing it to a minimum of $5.25 per hour by June 2026, CEO Joe Rogers III announced in a video to employees. [emphasis added]

    I’m speechless. I made more than $3/hour on my second job–in 1971, when rent for a one bedroom was $125/month and 5 guys that I knew in college rented a house together for a whopping $300/month.

    The article continues:

    The video was released in May, but has come to light only recently. Rogers called the move “the single largest additional investment in our workforce in the entire 68-year history of Waffle House.” [emphasis added]

    I’m sure of that. What investment in workforce is required these days, anyway?

    And in a late surprise move:

    Base pay is just part of a worker’s salary at Waffle House. Tips are on top of that (and the company ensured its workers that there would be no tip-sharing or tip-pooling as part of the new compensation—each worker would keep the tips they earn) [undoubtedly because bussers and dishwashers are already making the big buxx. I know I was back in the day]. Staff will also receive a tenure bonus, based on how long (cumulatively) they have worked at the company. Starting this month, waiters and waitresses will receive the same tenure bonus as grill operators. [emphasis added]

  38. Kathy says:

    @Michael Reynolds:

    Yes, so the restaurant would get 10-20% of their income tax free, then be able to deduct the tips paid as wages to servers.

    I wonder how they’d work that with hotels and casinos, where tips for housekeeping and dealers are almost entirely given in cash.

    I don’t know about levels of service in Europe to be able to comment.

  39. Scott O says:

    @Andy: What’s to stop everyone who can getting tips instead of regular income?
    Let’s say you want a kitchen remodel. Contractor says it will be $100k. They write you a contract for $10k plus a gratuity of $8ok. Discount because the “tip” is tax free. Restaurants have mandatory gratuities in some cases, eg large parties. Why can’t your contractor do that? Or your dentist, lawyer, favorite author, etc.?

    7
  40. Hal_10000 says:

    Am I the only one who remembers that Trump was actually President four years? It’s true! And not only did nothing on tips, but wanted to push through a rule that would allow employers to confiscates tips under the guides of “sharing” them with other staff.

    6
  41. Paine says:

    At least he isn’t offering to cancel student debt, as that would be “buying votes.” Very unseemly…

    3
  42. Eusebio says:

    @Kathy: “I see a reduction in tip amounts more likely as people figure “well, they are not taxed for this, so they don’t need as much.”

    That was my first thought this weekend as I was driving and my wife read out loud a “no tax on tips” sign that someone had posted at an intersection–first I’d heard of it. If such a measure were implemented, everyone would be well aware and would adapt to some extent. It strikes me as the same kind of fantastical thinking that leads people to think they can have all their current services, privileges, and domestic and international security after eliminating x, outlawing y, or privatizing z.

    My second thought… just what we need, another category of income with special treatment in the tax code.

    1
  43. Eusebio says:

    And I see that he said, “I have announced that I will eliminate taxes on gifts for restaurant workers and hospitality workers.”

    Interesting use of the word “gift”, which has special meaning for a rich person. Sounds like maybe he wants to eliminate the gift tax and related estate tax, which are paid by the givers, and only wealthy ones at that.

    1
  44. Andy says:

    @Scott O:

    Yes, that’s one of many reasons it’s a bad idea on the merits, but it could be effective for helping Trump win the election.

    1
  45. James Joyner says:

    @JKB:

    Frederick Lewis Allen was one of the pioneers in social history. Best known as the author of Only Yesterday, Allen originated a model of what is sometimes called instant history, the reconstruction of past eras through vivid commentary on the news, fashions, customs, and artifacts that altered the pace and forms of American life. The Big Change was Allen’s last and most ambitious book. In it he attempted to chart and explain the progressive evolution of American life over half a century. Written at a time of unprecedented optimism and prosperity, The Big Change defines a transformative moment in American history and provides an implicit and illuminating perspective on what has taken place in the second half of the twentieth century. Allen’s theme is the realization, in large measure, of the promise of democracy. As against the strain of social criticism that saw America as enfeebled by affluence and conformity, Allen wrote in praise of an economic system that had ushered in a new age of well being for the American people. He divides his inquiry into three major sections. The first, ‘The Old Order,’ portrays the turn-of-the-century plutocracy in which the federal government was largely subservient to business interests and the gap between rich and poor portended a real possibility of bloody rebellion. ‘The Momentum of Change’ graphically describes the various forces that gradually transformed the country in the new century: mass production, the automobile, the Great Depression and the coming of big government, World War II and America’s emergence as a world power. Against this background, Allen shows how the economic system was reformed without being ruined, and how social gaps began to steadily close.The concluding section, ‘The New America,’ is a hopeful assessment of postwar American culture. Allen’s analysis takes critical issue with many common perceptions, both foreign and domestic, of American life and places remaining social problems in careful perspective. As William O’Neill remarks in his introduction to this new edition, The Big Change is both a deep and wonderfully readable work of social commentary, a book that gains rather than loses with the years.

  46. ptfe says:

    New lawyer fee structure: $1 up front, all other costs are gratuities.