This doesnt set well with me, I am wrong?

[MichaelB]

I'm not an expert and I think you do have credentials in this area, so I'll go with what you say. I just thought that not reporting tip income was income tax evasion. If you say otherwise, so be it.......

We are (and always have been) in complete agreement that not reporting tip income is tax evasion.

 

[Alan]

Is unreported tips a real issue? The restaurant must report tips and withhold payroll taxes, and the owners face penalties if caught aiding the effort to evade tips.

I'm not an expert and I think you do have credentials in this area, so I'll go with what you say. I just thought that not reporting tip income was income tax evasion. If you say otherwise, so be it.......

A couple of years ago I volunteered as a tax aid and prepared many tax returns for folks whose only income was from waiting tables. Let me tell you that although unreported tips are tax evasion, then the folks I saw would have to get a lot of cash tips to earn enough to get to a level where they paid any tax.

From my limited experience I don't see that the loss in taxes from unreported tips to restaurant staff is going be significant in any meaningful way.

However, I do think that young folks hiding tips from the taxman is unnecessary and builds bad habits. (I also believe tax evasion is a bad thing at any level)

 

[youbet]

We are (and always have been) in complete agreement that not reporting tip income is tax evasion.

Oh good! My faith is restored.........

 

[Mulligan]

That is a fair question, I've wondered too. Although there are state minimums (varying all over the place) evidently the Federal server wage minimum has not increased in 20 years (less often than the general minimum wage) so for a servers total compensation to increase in the past 20 years, the entire increase may have had to come from higher tips, via a higher %. The chart below is conspicuous IMO. Real wages for minimum wage workers have dropped, real wages for servers (not shown on the chart) have dropped even more dramatically in some/many states. I'm not suggesting what's right or wrong, just providing one of the potential reasons server tip % have gone up.

It's also fair to ask, as someone did earlier, why a server should get the same percentage to bring me a $35 entree vs a $6 entree, same amount of work for the server. Where it really gets "interesting" is wine, why should a server get the same % for bringing me a $3000 bottle vs a $30? BTW, many people tip a % of the food bill and a flat $ amount per bottle of wine for this reason. And no, I've never even come close to a $300 wine much less $3000.

That was an informative chart, Midpack. Brutal, I had no idea the federal server wage minimum has not increased while the minimum wage has. So I guess the increased tipping is indeed subsidizing employers salary contributions. You think the government could have thrown those workers a dollar an hour bone somewhere in the past 20 years!

 

[youbet]

From my limited experience I don't see that the loss in taxes from unreported tips to restaurant staff is going be significant in any meaningful way.

I disagree for the reason you state below.........

However, I do think that young folks hiding tips from the taxman is unnecessary and builds bad habits. (I also believe tax evasion is a bad thing at any level)

An act can be significant even if the dollar value is minor.

 

[target2019]

Tipped wage employee are often required to open and close sections of the restaurant. There are different interpretations of whether the employee should receive minimum wage or tipped wage for the associated time. The corporate-run restaurants tend to follow the letter of the law. Even for training they pay the minimum wage. The mom and pop restaurants seem to make the rules up as they go.

So the server may get a whopping $7.25/hour to clean up the mess and set up for the next day. Or they need to stand for an hour or two (at tipped wage) even though there are no customers. This is likely to happen between 10pm and 2am, for an hour or two.

Something that comes to mind is that we need to walk a mile in their shoes, receive the paycheck, and then evaluate.

 

[Midpack]

Something that comes to mind is that we need to walk a mile in their shoes, receive the paycheck, and then evaluate.

I agree, though you might be surprised at the variation in their experiences. In college, I worked at a pizza place for a while. Did OK waiting tables there, and got to take home a free 24" pizza every night I worked (fed 3 of us).

OTOH, I worked one summer at a high end restaurant. 15% was the customary tip then. The restaurant legally paid waiters $1.10/hr. There was no tip sharing required or even suggested by management. I voluntarily paid my busboys about $5.00/hr (we asked for each other), so in essence I net paid the restaurant to work there. Did they take advantage of me?

Maybe I'm a fool, but I made so much more that summer than I ever could have at any wage only summer job, I was thrilled. And I enjoyed the work/camaraderie. I made as much at that restaurant as I made as an Engineer after college for the first several years. That was 40 years ago, and undoubtedly much has changed, but I suspect servers in middle to upper end restaurants still do very, very well (based on my tip alone x number of tables/hour they cover). Let's do a little math.

• Let's say a customer at a Darden restaurant spends $15 between drinks, apps, entree and/or dessert plus taxes. Lots of restaurants average 2-3 times that ($30-45 per person).
• Let's say the average table is a 4-top, so $60 per table. Table turns in an hour on average (Darden).
• Server has 5 tables (could be more, even 10), that's $300/table-hr.
• Let's say 15% tip, even though 18-20% if probably the norm these days. That's $45/hr in tips plus a small minimum hourly wage, $90/hr if they have 10 tables. And 2-3 times that in a high end restaurant.
• Even if they only have 6 hours with tips and spend 2 hrs on setup and cleanup (with no tips). Works out to $34/hr for 5 tables or $68/hr for 10 tables. And again 2-3 times that in a high end restaurant.
• Sounds like a pretty nice gig for a high school grad to me, and it was 40 years ago too.

Tips were far and away the biggest incentive for servers. Like I said earlier, baking tips into food prices would be a huge mistake IMO. Poorer service and I'd bet servers would make considerably less. You think Darden will up servers pay to $34-68/hr?

 

[Mulligan]

Tipped wage employee are often required to open and close sections of the restaurant. There are different interpretations of whether the employee should receive minimum wage or tipped wage for the associated time. The corporate-run restaurants tend to follow the letter of the law. Even for training they pay the minimum wage. The mom and pop restaurants seem to make the rules up as they go.

So the server may get a whopping $7.25/hour to clean up the mess and set up for the next day. Or they need to stand for an hour or two (at tipped wage) even though there are no customers. This is likely to happen between 10pm and 2am, for an hour or two.

Something that comes to mind is that we need to walk a mile in their shoes, receive the paycheck, and then evaluate.

That in essence was my original point. I certainly don't have the answers and definitely not making anything political. But for the good of the country and the tax payers especially higher earning ones who may have a target on their wallet, the race to the bottom, certainly isn't good for anyone. I had no idea that tipped wage scale hadn't budged in 20 years. It gets to my thought about a recent news story that quoted a Pennsylvania government department stating a women with 2 kids making less than $29,000 is better off than making over $60,000 due to the various benefits one gets from government services. At what point will people just say the heck with it. Why bust my hump for scraps when I can do just as good or better not working? I certainly don't think these types of jobs should be paid what professionally trained people get, but those jobs aren't easy either as I sure didn't have working in a restaurant part time on my part time work list. Five years of it during my teen years was plenty!

 

[audreyh1]

After all these years, we still tip 15% in general, going above that amount for exceptional service. This tends to be calculated on the total after tax (we never buy alcoholic drinks) just for simplicity. Around here, the service level in the nicer, higher priced restaurants tends to be much higher than in an inexpensive mom-and-pop eatery or chain so the tip increase seems appropriate. Nevertheless, where the food is really cheap and the service good we tip proportionally higher (as if the bill were always at least $20).

Since I never bought into the increasing % for waiter's tips idea (and I waited tables many years), I'm glad to know I'm not too old fashioned in my approach - Basic Tips on Tipping: How Much and To Whom?

Remember once when real estate agents were trying to increase the % in their commissions? Hogwash!

 

[MichaelB]

I don't remember when restaurant tipping was less than 15%. As far as I know 15% is still good. Restaurants add 15%-18% for large groups, and I've only seen restaurants add more in NYC, and then on a very limited scale, so 20% may be written about but not the standard.

 

[Midpack]

Most sites I looked at just said 15-20%. One data point from Zagat 2012:

The West Coast tips less than the rest of the country, with San Francisco tipping the lowest at 18.6% and New Orleans tipping the highest at 19.7%. The U.S. tipping average is 19.2%, a number that has grown steadily in the past ten years. In 2000, the average tip was 18%.

 

[MichaelB]

Most sites I looked at just said 15-20%. One data point from Zagat 2012:

Hmm. Maybe I'm getting a bit curmudgeonly here. I still think 15% is adequate for good service, especially if there is bar service. More if appropriate, but because the staff worked for it. Zagat is a good data point but seems a tad generous to me - perhaps their client base is tilted to people that spend a lot of time in restaurants and want to encourage repeat good service. For a $50 dinner tab the additional 4% (from 15% to 19%) is only $2 so it is small thing for the diner and a big thing for the staff and servers.

 

[ERD50]

The one place I tip a higher %, because the $ amount seems small for the time they spend, is the chain haircut places. $3 or $4 on a $10~$12 haircut is 30%, but it's still just $3 or $4. I guess I never actually stop-watched to figure the hour rate, if they manage 4-5 customers per hour (I doubt they average that), that doesn't seem like a lot for something that requires some skill. I'm assuming they make minimum wage and depend on tips, because it doesn't seem like $10 covers much overhead. And I don't buy any marked up 'products', so that's all they're getting from me.

Something that comes to mind is that we need to walk a mile in their shoes, receive the paycheck, and then evaluate.

That strikes me as a very curious thing to say.

Does that apply to every occupation? It's going to be tough for me to go out and be a car mechanic for a week, a doctor, a fireman, a carpenter, a CEO, work a cash register, etc, so I can decide what their job is 'worth'.

I think there's already a pretty good system in place for that, it called (wait for it....) the free market. Can't these people decide if the job is worth it, or worth seeking an alternative, themselves? Give them some credit.

And speaking of curious things to say, bold mine:

If you have a problem with someone putting a ten or twenty into the hand of someone's daughter, because you know what is really going on, then we can just disagree. I'll continue to do this.

How does that play into it? Someone's daughter, or son, or... what? What else would they be? Does that change it somehow, so it's no longer supporting tax evasion? I don't expect you to stop on my account, but let's call a spade a spade.

-ERD50

 

[imoldernu]

Tipping is especially important during the Christmas season. I always wait for the NBC Today Show that discusses the proper amount to tip. If I miss the show, I'll go back to last years' recommendations.

In favorite restaurants. Usual waiter double.. or 40%, Maitre'D... $50
Doorman- $200
Dog walker- One month's pay or $200
Barber/stylist - $100
Manicurist - $50
Psychiatrist- $300
Trainer - $100
Superintendent $300
Butler.... naw, just kidding... Don't have a butler.

Biggest problem I have with general restaurant tipping is the way some of our friends are so tight it's embarrassing. Even worse when they pick up some of the money I leave, and give it back to me, saying it's "too much". Aaaaarghh.

 

[youbet]

Tipping is especially important during the Christmas season. I always wait for the NBC Today Show that discusses the proper amount to tip. If I miss the show, I'll go back to last years' recommendations.

In favorite restaurants. Usual waiter double.. or 40%, Maitre'D... $50
Doorman- $200
Dog walker- One month's pay or $200
Barber/stylist - $100
Manicurist - $50
Psychiatrist- $300
Trainer - $100
Superintendent $300
Butler.... naw, just kidding... Don't have a butler.
.

Gee, the only occupations on that list that I employ are waiter and barber. No butler or doorman here.......

I generally tip wait staff no extra during the holidays. Admittedly, we never go to restaurants on Christmas Eve or Christmas day and I might feel differently if we did and the service was superb. But an extra tip amount just because it's the holidaze season? Naw......

Last year I gave my barber a $45 tip after my December haircut. He charges $15. I don't tip him during the year.

 

[Bestwifeever]

Tipping is especially important during the Christmas season. ....

In favorite restaurants. Usual waiter double.. or 40%, Maitre'D... $50
Doorman- $200
Dog walker- One month's pay or $200
Barber/stylist - $100
Manicurist - $50
Psychiatrist- $300
Trainer - $100
Superintendent $300...

Some of these must be jokes. I can't imagine a psychiatrist (an MD) would accept a tip.

 

[MichaelB]

Tipping is especially important during the Christmas season. I always wait for the NBC Today Show that discusses the proper amount to tip. If I miss the show, I'll go back to last years' recommendations.

In favorite restaurants. Usual waiter double.. or 40%, Maitre'D... $50
Doorman- $200
Dog walker- One month's pay or $200
Barber/stylist - $100
Manicurist - $50
Psychiatrist- $300
Trainer - $100
Superintendent $300
Butler.... naw, just kidding... Don't have a butler.

Biggest problem I have with general restaurant tipping is the way some of our friends are so tight it's embarrassing. Even worse when they pick up some of the money I leave, and give it back to me, saying it's "too much". Aaaaarghh.

$1300 so far in tips, not counting the 2x for the favorite waiter. If we tipped like that I'd have to go back to work.

 

[imoldernu]

$1300 so far in tips, not counting the 2x for the favorite waiter. If we tipped like that I'd have to go back to work.

What makes it more strange, it that we live in the country, don't go out to eat often, don't have a dog, live more or less in the country, in a house, am already trained, not sure what a manicurist does, and haven't been to a barber in 52 years. As to the Pychiatrist?.... mebbe.

 

[Marc]

In Asia, tipping is not customary and leaving of money on table may even be an insult; service is excellent. Waiting is a profession; not something for the young to do before starting "real" career.

In Europe, service charge of around 10% is already included in bill; service can be excellent or poor. Most small places the waiters are family. Even in larger, it is up to the owners to see if their waitstaff are driving customers away. Waiting is a profession for many; not necessarily something for the young to do.

In US, we have this arbitrary tipping rule. I don't mind a restaurant putting in rules for sharing of tips; after all, the waitstaff have a choice as to occupation. As to different minimum wage amounts; why do we need them at all?

Marc

 

[Mulligan]

Gee, the only occupations on that list that I employ are waiter and barber. No butler or doorman here.......

I generally tip wait staff no extra during the holidays. Admittedly, we never go to restaurants on Christmas Eve or Christmas day and I might feel differently if we did and the service was superb. But an extra tip amount just because it's the holidaze season? Naw......

Last year I gave my barber a $45 tip after my December haircut. He charges $15. I don't tip him during the year.

My barber is one I tip also. Four barbers in town and they all are locked in at $11 a haircut unchanged in price in over 12 years. Each one is afraid if they raise it a buck the others would get all the business, so I just give him $15 every time.

 

[Midpack]

Biggest problem I have with general restaurant tipping is the way some of our friends are so tight it's embarrassing. Even worse when they pick up some of the money I leave, and give it back to me, saying it's "too much". Aaaaarghh.

My 90 yo Dad has more money than they'll ever need, but when we go out to a restaurant and he wants to buy, I covertly watch his CC tip. It's usually in the 10-15% range (must have been the norm in 'his day') so I always have a $5, $10 or $20 in my pocket to drop on the table when we leave, once he's turned away. Everyone is happy, and Mom and Dad are none the wiser. I am sure many of us do the same...

 

[Midpack]

What makes it more strange, it that we live in the country, don't go out to eat often, don't have a dog, live more or less in the country, in a house, am already trained, not sure what a manicurist does, and haven't been to a barber in 52 years. As to the Pychiatrist?.... mebbe.

Good on you, I think you had many of us scratching our heads.

I let my butler read it, he didn't think it was funny though, no sense of humor...

 

[JPatrick]

My 90 yo Dad has more money than they'll ever need, but when we go out to a restaurant and he wants to buy, I covertly watch his CC tip. It's usually in the 10-15% range (must have been the norm in 'his day') so I always have a $5, $10 or $20 in my pocket to drop on the table when we leave, once he's turned away. Everyone is happy, and Mom and Dad are none the wiser. I am sure many of us do the same...

Yup, did the same thing. So far my kids have not started bumping up my tips, so apparently I'm still in touch., or they are frugal---nah, no way.

 

[Midpack]

Yup, did the same thing. So far my kids have not started bumping up my tips, so apparently I'm still in touch., or they are frugal---nah, no way.

How do you know? My Dad has no idea...

 

[JPatrick]

How do you know? My Dad has no idea...

When we are ready to depart, I visit the restroom while the others head for the car, then on the way out I do a final tip check--very covert.