How would banning taxes on tips actually work?
Consider This from NPR
NPR
4.2 • 6.2K Ratings
🗓️ 25 August 2024
⏱️ 11 minutes
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Summary
Wailin Wong and Darian Woods from NPR's daily economics podcast, The Indicator, dive into the potential guardrails for a policy that many economists believe could easily go off track.
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Transcript
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| 0:00.0 | If you've ever had a job where you worked for tips, here's an economic proposal you might find appealing. |
| 0:06.0 | It's called no tax on tips. |
| 0:09.0 | No tax on tips. |
| 0:12.0 | No tax on tips. No tax on tips. Earlier this year, Donald Trump began pitching this idea of ending federal income |
| 0:16.6 | tax on tipped wages and then this month we will continue our fight for |
| 0:21.8 | working families of America. |
| 0:25.3 | Kamel Harris echoed the idea of no tax on tips during a speech in Nevada. |
| 0:30.4 | And eliminate taxes on tips for service and hospitality workers. |
| 0:36.2 | So you can hear some enthusiasm for this policy idea, right? |
| 0:41.0 | But you know who actually hates this idea? Economists and tax experts like Howard |
| 0:47.0 | Glegman. |
| 0:48.0 | It's a terrible idea. |
| 0:49.0 | Glegman's a senior fellow at the Urban Brookings Tax Policy Center. He and other economists say |
| 0:54.6 | this is actually a bad idea for many reasons. For one there's unfairness. For |
| 1:00.5 | instance why should a waiter get part of their income tax-free, but the dishwasher in the back doesn't? |
| 1:07.0 | Nor would someone who works a cash register at a grocery store? |
| 1:10.0 | And then there's a concern that some people could game the system. |
| 1:14.0 | Like what would stop a high-paid corporate lawyer from claiming their six-figure salary as tips? |
| 1:21.0 | So consider this. |
| 1:24.0 | Leaders in both parties are pushing this idea of tax-free tips. |
| 1:28.0 | How do their proposals differ? |
| 1:30.0 | And is there any way to avoid the downsides economists are warning about? |
... |
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