Donald Trump calls for eliminating taxes on tipping, sparking mixed reactions from Republicans

WASHINGTON — During his private meeting with Senate Republicans last week, former President Donald Trump joked that a new campaign speech had made him very popular with caddies at his golf course near Mar -a-Lago: end taxes on money earned from tips.

It’s an idea that won praise in the Senate chamber and one that Trump will likely return to as he courts working-class voters in swing states with important services, like industries in Nevada, Texas. Arizona and Georgia in his rematch this fall with President Joe. Biden.

But it’s clear that the election year talking point will materialize in the form of a serious policy plan on Capitol Hill. Several influential Republicans told NBC News they were skeptical of the idea, citing the growing national debt and questioning whether it would be fair to non-tipping employees.

Trump also mentioned his desire to end taxes on tips in a previous meeting with House Republicans, the representative said. Tim Burchett, R-Tenn., who added that Trump told attendees how a waitress gave him the idea.

“This thing really caught fire organically,” Burchett, a Trump ally, said Monday, calling Trump’s proposal “smart policy.”

Three Republican senators who listened to Trump’s remarks in another closed-door meeting mentioned his speech on taxes and tipping, unprompted, as they were leaving last week. Senator Ted Cruz, Republican of Texas, Trump’s former rival, said the idea was “great” and could change voters’ perceptions of the parties.

“For someone who works as a waiter or waitress or for someone who works as a taxi driver or for someone who works as a bellboy in a hotel, there are many people who start to climb the economic ladder and who rely on tips,” he said. said Cruz, who faces his own re-election battle this year in Texas. “The caricature of the Republicans is that the Republicans were the party of the rich and the Democrats are the party of the poor and the working class. »

Other Republicans are skeptical of the floating proposal.

“I don’t know if we should just make a unilateral decision about tipping rather than focusing on workers in general,” the representative said. Chip Roy, R-Texas, an influential conservative, said in an interview. “For example, why would you favor employees who earn a tip over someone else who earns a similar salary? …It might even raise legal questions about how you treat one person versus another.

“The idea of ​​making sure that hard-working families aren’t burdened by taxes? GOOD. Differentiating between tipping and non-tipping, I’m not sure I fully believe that,” Roy said.

Rep. Vern Buchanan, R-Fla., vice chairman of the tax-writing Ways and Means Committee, also said he was not convinced by the idea of ​​reclassifying how tips are taxed, citing the debt growing nationally.

“You just have to be careful with it. We are running multibillion-dollar deficits. You have to be careful with all this. said Buchanan. “I want to be sensitive, because they work hard. And obviously, a large part of their income comes from tips. All of these programs sound great; Everyone likes to pay less taxes. But we have to pay the bills.

According to the IRS, all cash and non-cash tips are subject to federal income tax. This means that Congress should step in and pass a law to exempt tips from taxes in the future. Much of Trump’s tax cuts expire at the end of 2025 and, if elected, Trump’s tipping idea could be on the menu for policymakers seeking to rewrite the tax code.

Such a decision would have significant impacts on the debt.

The Committee for a Responsible Federal Budget, a research group that advocates eliminating red ink, estimated in a paper published Sunday that exempting tips from income and payroll taxes could reduce federal revenues by as much as ‘to 250 billion dollars over 10 years.

Asked if the campaign included policy details or a cost estimate, Trump ad Karoline Leavitt responded in an email: “President Trump intends to ask Congress to eliminate taxes on tips to put more money back in the pockets of hard-working service workers. On the contrary, Joe Biden has aggressively stepped up with the IRS to go after tipped workers. (The White House says the additional IRS funds obtained by Biden are aimed at improving customer service and targeting wealthy tax evaders, not low- and middle-income earners.)

Lael Brainard, one of Biden’s top White House advisers, responded cautiously when asked about Trump’s idea, citing the Hatch Act’s prohibitions on political activity by state officials. west wing.

Overall, Brainard told reporters on a call last week, Biden has “fought for real solutions that actually address workers’ legitimate need for fair wages” and has better ideas for workers. of Nevada – including a higher minimum wage and overtime protections.

“So we think the set of meaningful policy changes that would actually improve the standard of living for workers in Nevada and across the country would be to raise the minimum wage and eliminate the tipped minimum wage, which would result in $6,000 in income extra per year,” she said.

A day after his visit to Capitol Hill, while celebrating his 78th birthday with supporters at the West Palm Beach Convention Center in Florida, Trump recounted the history of the tipping proposal in more detail. He was at a restaurant in Las Vegas and asked a waitress what it would take to win his vote. She told him to eliminate taxes on tips, Trump said. To get the message across, he then asked his supporters to write on their restaurant receipts: “Vote for Trump because there is no tax on tips.”

A Trump loyalist, Rep. That’s exactly what Marjorie Taylor Greene, R-Ga., did, tweeting a photo of a receipt with the message “VOTE TRUMP! No tax on tips!!”

Rep. Byron Donalds, R-Fla., another Trump ally, also welcomed the idea.

“Look, as a former server — I was a table server in college and a little bit after college — I think we should absolutely do this,” Donalds said. “Waiters, waitresses, service staff, they work hard every day. They work hard and are not millionaires. Chasing them like this makes no sense to me.

And the senator. Kevin Cramer, R-N.D., who relayed Trump’s story about his shopping carts, also sees the tipping proposal as a way to win over voters: “The tipping issue is good for Trump and the Republicans. Working-class voters haven’t been this pro-Republican since Reagan,” Cramer said in a brief interview Monday.

Burchett said the economic impact would be positive despite the red ink the policy could create.

“I’m confident these people aren’t going to put this in a mattress or bury it in a mason jar in your backyard. They’re going to put it back into the economy pretty quickly,” he said. “I would rather have Americans invest this than have the federal government steal it.”

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