Both Trump and Harris have promised casino workers that they would pass legislation that exempts tips from taxes, effectively boosting their cash-on-hand in real terms. Yet, none of the two candidates has told workers how hard passing such legislation would be, verging on the impossible.
Trump and Harris Think Good Politics, Not Good Policy
Eliminating tax on workers’ tips would be a major challenge, not least because it would deprive the federal budget of important revenue.
Yet, such a move would invite further economic chicanery with workers and employers suddenly finding themselves in a position where they have realized that parts of their remunerations might better qualify as tips.
Despite both Harris and Trumps’ desire to court workers and voters in swing states, the practicality of their attack line from the stump has been more of a red herring rather than the real thing. Trump, though, was caught off-guard when Harris copied his proposal and went on social media to complain about his most likely opponent in the November election.
None of the two candidates has fleshed out in acceptably tangible terms how they would go about passing such a major change in legislation, and not hurt the economy. Furthermore, observers expect that while good on paper for casino workers, and other workers who rely on tips, the measure would not improve the livelihoods of many low-income workers the same way as a higher minimum wage would.
Harris’s proposal, for one, though, seems to be closely rooted in some sort of reality, as the campaign has acknowledged that exempting tips from taxation would invite unsavory practices, and has confirmed that there are already hedges planned against that. No specifics were given as to what the proposed safeguards are. Trump’s campaign has chosen not to flesh out any details in the meantime.
Not everyone agrees with the bleak outlook, however. According to Darin Miller, a spokesperson for Senator Ted Cruz of Texas, there is too much hysterics surrounding the issue, as the Internal Revenue Service has a very clear definition of what tips are, and fudging the numbers would be hard, and risk a serious federal response. This may be true, but the IRS is also spread thin.
Unions May Be Turning on Republicans
Exempting tips another insider says is not necessarily a good policy – it may be good politics though. The reason for this is that tipped workers tend to be younger, and they also have a lower income, which means that they fall into a lower tax bracket. Further exemption on their tips will not necessarily translate into better living conditions, for example.
Yet, Harris is certainly reaping some benefits. Union bosses may generally represent Republican-leaning members, but they have been less than pleased with the former president or his comments on union busting, and a recent conversation he had with Elon Musk, Tesla’s boss.
Now that Harris has vowed for the same measure, many unions seem likely to try and convince their members to vote for the Democratic ticket.
In the meantime, the United Auto Workers has filed a lawsuit against Musk and Trump, precisely because of their conversation, in which Trump praised the tech boss’ management style which supposedly boils down to union busting and firing employees who protest working conditions.
In contrast, Harris also seems to be in a good position with the tribal gaming industry, which has been content with the Biden administration.