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July 29, 2024
Editor, The News-Gazette: In the third chapter of the recently issued 2024 Republican Platform, under the heading of “Make Trump Tax Cuts Permanent and No Tax On Tips,” it states: “We will eliminate Taxes on Tips for millions of Restaurant and Hospitality Workers, and pursue additional Tax Cuts.” The real-life example below shows that eliminating taxes on tips is really just an insincere ploy to come across as a champion for the “working people.”
For example, a head of household, let’s say named Kris, who has a child under 13 years of age who receives child care, and works 40 hours per week for 52 weeks at the minimum tip wage of $2.13, this person’s annual wage income will total $4,430. If Kris earns and declares $19 in tips for each and every of the 2080 hours worked in one year (no vacation and loads of tips!), the annual wage and tip income will total $43,950. Using the 2023 TurboTax tax calculator estimates, and based on current income deductions and tax credits, including child-care deductions and earned-income tax credits, Kris was not obligated to pay any federal taxes in 2023 anyway, and may have received even a small refund!
So, in fact, there is no need to “eliminate the tax bill for most (or all) tip workers,” because there is already no federal tax liability for most tip workers like Kris and other local tip earners (though, in my view, additional assistance would be helpful to such a hard-working household, or even better, a livable wage!). But, it is likely that the Republican Platform’s “additional tax cuts,” just like the 2017 tax cut, will accrue significant additional financial benefits to the wealthiest 1 percent of our population, not to the other 99 percent. DAN WALZ Lexington
