No Tax on Tips, No Tax on Overtime--White House Calculator

[GrayHare]

This has long been an issue. Apparently, the discussion about "declaring it" in 1963's It's A Mad, Mad, Mad, Mad World was improvised. "But sure, if we find the money, we still have to report the taxes. Otherwise, it's like stealing from the government."

 

[Sunset]

As someone who is now working service part time, I can relay my real world experience for a small sample size. This is in SC:

View attachment 56158

You can see the Pay is 7.75/hr. Tips are "pooled" for the 2 week period and spread across all persons working Taproom Service. YTD the tips avg 20.85/hr, making total pay $28.60/hr.

I won't comment on whether I think this part of the bills is a good thing or not for me, but I can tell you it would make a big difference for others working there that are not doing it for "fun" (for the most part) like me.

Flieger

Interesting, so you take in tips roughly 2x your pay.

This is for recorded tips, is the place set up so you can't get cash tips, as in no table service and everyone pays at 1 register ?
Still seems to leave room for someone tossing a bill across the counter.

Do you get cash tips as well ?

 

[Flieger]

Interesting, so you take in tips roughly 2x your pay.

This is for recorded tips, is the place set up so you can't get cash tips, as in no table service and everyone pays at 1 register ?
Still seems to leave room for someone tossing a bill across the counter.

Do you get cash tips as well ?

It's actually closer to 2.5x.

Yes, some people want to pay in cash or give tip in cash. There's a lot of people that think "cash" tips are under the table. I can tell you that at this place (and others that I have asked about since coming here) take all cash tips and join them with the tips on CC's. It is all distributed amongst the team and included in the information I provided above. IOW, all tips are "recorded" tips.

Flieger

 

[pb4uski]

As someone who is now working service part time, I can relay my real world experience for a small sample size. This is in SC:

View attachment 56158

You can see the Pay is 7.75/hr. Tips are "pooled" for the 2 week period and spread across all persons working Taproom Service. YTD the tips avg 20.85/hr, making total pay $28.60/hr.

I won't comment on whether I think this part of the bills is a good thing or not for me, but I can tell you it would make a big difference for others working there that are not doing it for "fun" (for the most part) like me.

Flieger

One interesting aspect is that from what I can find pooled tips for kitchen staff would be exempt from tax in some cases but taxable in other cases, and it could vary by state. So you could have two restaurants near each other in different states in in one case kitchen staff tips are taxed and in the other they are not. Also it add a whole set of rules to determine if tips are "customary" and taxed or not.

Not to mention the inequity of workers who make the exact same money but one is wages and tips and the other is wages only (see graphic below from NYT article on the subject). Seems very unafir to me.

Source: An Illustrated Guide to Who Really Benefits From ‘No Tax on Tips’

 

[Flieger]

The enemy of good is perfect.

Flieger

 

[Qs Laptop]

One interesting aspect is that from what I can find pooled tips for kitchen staff would be exempt from tax in some cases but taxable in other cases, and it could vary by state. So you could have two restaurants near each other in different states in in one case kitchen staff tips are taxed and in the other they are not. Also it add a whole set of rules to determine if tips are "customary" and taxed or not.

I'm not seeing how a FEDERAL tax law can vary from state-to-state.

Not to mention the inequity of workers who make the exact same money but one is wages and tips and the other is wages only (see graphic below from NYT article on the subject). Seems very unafir to me.

View attachment 56160View attachment 56159


Source: An Illustrated Guide to Who Really Benefits From ‘No Tax on Tips’

Wow, an entire article devoted to telling us that non-tipped workers will not benefit from the "No Tax on Tips" clause in the new tax legislation. Thanks NY Times!

 

[sengsational]

I think it's a case about being unequal.

 

[Gumby]

This has long been an issue. Apparently, the discussion about "declaring it" in 1963's It's A Mad, Mad, Mad, Mad World was improvised. "But sure, if we find the money, we still have to report the taxes. Otherwise, it's like stealing from the government."

It is too benign to say that failing to report income is "stealing from the government" when, in fact, it is stealing from those of us who do pay our taxes in full. If everyone properly paid what they owed, the rates could be lower for all of us.

 

[aaronc879]

I sorry, I wasn't talking about the deficit, and I don't want to talk about the deficit.

The marketing I'm referring to is the tool provided to calculate tax savings for workers who receive tips.

Do you think the earning numbers I put in the calculator were in the ballpark?

I do not think the average waitress is making $67K/yr+. as your numbers show. Most have a base below federal minimum of $7.25/hr then have to share their tips with other staff. I'm talking about the majority of waitresses working in a diner or small scale restaurant, not an upscale restaurant which account for a small minority of wait staff.

 

[sengsational]

I wonder if there are honest independent business people using the calculator putting their weekly cash-paid total on the tips slider "just to see" what kind of savings they would get. They have to deal directly with the consumer, just like servers. Maybe they should lobby for a tax break too.

 

[Qs Laptop]

I do not think the average waitress is making $67K/yr+. as your numbers show. Most have a base below federal minimum of $7.25/hr then have to share their tips with other staff. I'm talking about the majority of waitresses working in a diner or small scale restaurant, not an upscale restaurant which account for a small minority of wait staff.

Yes, I will concede that my estimate of $67K per year in earnings is probably high.

But your assertion that "most waitresses have a base below federal minimum of $7.25/hr." is likely false.

Take a look at the graphic that Cathy63 posted

Minimum Wages for Tipped Employees

www.dol.gov

It would be accurate to say that most states have waitress wages below the federal minimum. But most waitresses by sheer numbers? Unknown, for sure because with California, New York, Florida, Illinois, Pennsylvania, New Jersey among those states with wages above the federal minimum it's not for certain that most waitresses make less than base of $7.25.

 

[Qs Laptop]

I wonder if there are honest independent business people using the calculator putting their weekly cash-paid total on the tips slider "just to see" what kind of savings they would get. They have to deal directly with the consumer, just like servers. Maybe they should lobby for a tax break too.

The criteria is those employees that receive tips, not those employees that deal directly with consumers. But, hey, if they want to lobby for something, it's a free country.

I think the Trump campaign found an issue that would appeal to blue collar workers and went with it. It seemed to help him win.

 

[aaronc879]

Agree, but that horse left the barn a long time ago. I just did a quick count in my tax software and there are about 30 different tax deductions and almost 50 different tax credits. Adding one or two more is neither here nor there. And that is just personal income taxes.

I'm up for eliminating all of them. Using the tax code to control the public's behavior by penalty/reward is poor public policy, IMO.

I think self employed people should be able to deduct their expenses but I can't think of any other credits that need to exists. I do think the standard deduction should stay and maybe even be increased but that's it for deductions.

 

[Chuckanut]

Yes, I will concede that my estimate of $67K per year in earnings is probably high.

But your assertion that "most waitresses have a base below federal minimum of $7.25/hr." is likely false.

Take a look at the graphic that Cathy63 posted

Minimum Wages for Tipped Employees

www.dol.gov

It would be accurate to say that most states have waitress wages below the federal minimum. But most waitresses by sheer numbers? Unknown, for sure because with California, New York, Florida, Illinois, Pennsylvania, New Jersey among those states with wages above the federal minimum it's not for certain that most waitresses make less than base of $7.25.

Ok folks, get up to date. Men and women serve tables. The term they use to describe their job is usually server.

And some states require the full minimum wage be payed to servers. Others set the tipped wage remarkably low.

It’s a mess. Which is why I would love to see the end of tipping. And let the boss determine their worth, not me.

 

[Qs Laptop]

Ok folks, get up to date. Men and women serve tables. The term they use to describe their job is usually server.

I had been using the term "waitpeople" throughout my previous posts. But when directly quoting someone, I use their terms.

And some states require the full minimum wage be payed to servers. Others set the tipped wage remarkably low.

Which is constitutional and proper for states to regulate this according to their local market.

It’s a mess. Which is why I would love to see the end of tipping. And let the boss determine their worth, not me.

Interesting take on the issue.

 

[Flieger]

I think it's a case about being unequal.

The entire tax system is unequal. I agree, this adds to it to some extent.

Flieger

 

[Flieger]

I do not think the average waitress is making $67K/yr+. as your numbers show. Most have a base below federal minimum of $7.25/hr then have to share their tips with other staff. I'm talking about the majority of waitresses working in a diner or small scale restaurant, not an upscale restaurant which account for a small minority of wait staff.

Take my example above and extrapolate it to 40 hours/week and it is $60k, in LCA of South Carolina. Add to that, this is not a high end establishment, so probably on par with the chain restaurant servers. I have a niece who works in a high end restaurant in Charleston as a "server" who makes 6 figures.

Flieger

 

[JohnnyPHX]

Ok folks, get up to date. Men and women serve tables. The term they use to describe their job is usually server.

And some states require the full minimum wage be payed to servers. Others set the tipped wage remarkably low.

It’s a mess. Which is why I would love to see the end of tipping. And let the boss determine their worth, not me.

I agree it's a mess. I don't mind paying for good service but when it's not so good it can get awkward.
I was thinking what if it was commission based incentive instead? Customer would know the total price up front. I think there would be more incentive for good service perhaps?
From CHATGPT summed up:
Commission-based pay rewards effort and sales skill without putting emotional pressure on the customer, offering more consistent and performance-driven income. Tip-based pay can lead to higher earnings in some settings but is unpredictable and often tied to customer mood rather than service quality. While tipping can feel awkward or unfair, especially when service is poor but the food is good, commission offers a clearer, less emotionally charged system.

 

[pb4uski]

I think it's a case about being unequal.

Yeah, reading comprehension is hard.

 

[pb4uski]

I'm not seeing how a FEDERAL tax law can vary from state-to-state. ...

From Perplexity: Kitchen staff will only see a significant tax benefit from the "No Tax on Tips" bill if they are in positions that customarily and traditionally receive tips and actually receive a substantial amount in tips. In some states and restaurants, back-of-house workers like cooks can participate in tip pools and would qualify for the deduction, but in many cases, kitchen staff do not regularly receive tips and thus would not benefit much.

 

[Aerides]

Take my example above and extrapolate it to 40 hours/week and it is $60k, in LCA of South Carolina. Add to that, this is not a high end establishment, so probably on par with the chain restaurant servers. I have a niece who works in a high end restaurant in Charleston as a "server" who makes 6 figures.

Flieger

Good for her, but she's an outlier.

I waited tables. That 8 hour shift started in the afternoon, with almost no traffic, or low-check traffic, while we prepared for the evening. 6-9 was always good (most days, not those raining Tuesdays of course), and the last few hours always tapered, often with folks going home early leaving half the staff to close. Saturdays were always better than Wednesdays. In the summer months (low season) we'd be asked to drop shifts.

Bottom line, taking what I would make from 6-9 on a friday night and extrapolating that over 40 hours would have made me thrilled. But that wasn't going to happen.

High end places in high tourism states do better, but if you are in a suburb in the middle of the country working at Applebees, it's very different.

 

[pb4uski]

...I think the Trump campaign found an issue that would appeal to blue collar workers and went with it. It seemed to help him win.

Yeah, it was definitely pandering for votes/buying votes... with our money.

 

[pb4uski]

The entire tax system is unequal. ...

Care to elaborate?

 

[Flieger]

Care to elaborate?

No more than the post I was responding to did. I'm not taking your bait.

Flieger

 

[Flieger]

Good for her, but she's an outlier.

I waited tables. That 8 hour shift started in the afternoon, with almost no traffic, or low-check traffic, while we prepared for the evening. 6-9 was always good (most days, not those raining Tuesdays of course), and the last few hours always tapered, often with folks going home early leaving half the staff to close. Saturdays were always better than Wednesdays. In the summer months (low season) we'd be asked to drop shifts.

Bottom line, taking what I would make from 6-9 on a friday night and extrapolating that over 40 hours would have made me thrilled. But that wasn't going to happen.

High end places in high tourism states do better, but if you are in a suburb in the middle of the country working at Applebees, it's very different.

Your example may be correct for your experience. Where I work (and where she works treats tips the same), no mater your shift timing, the tips are spread across all hours the same. Time of day would not matter, and so my extrapolation is correct. It's also across a nearly 6 month period, making it even more so.

Flieger