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We appreciate Tips, Thank you, tips jar in Mighty Quinns BBQ restaurant, Queens, New York

A jar reading, "We appreciate Tips, Thank you," is displayed at Mighty Quinns BBQ restaurant, Queens, New York.

(Photo by: Lindsey Nicholson/UCG/Universal Images Group via Getty Images)

This Tax Season Proved 'No Tax on Tips' Was Never for Workers

Cutting taxes on some tips for some workers is not a solution. Raising wages—and ending the subminimum wage—is.

During the election, Donald Trump boasted about lowering taxes for working Americans with his “no tax on tips” plan. This tax season, millions of Americans found out it was a scam.

You have to earn money for tax cuts to affect you. A tax deduction only helps if you owe taxes—and most tipped workers earn so little that they barely do. Two-thirds of tipped workers will not even earn enough to benefit. Zero minus zero is still zero. The vast majority of these tax cuts go to the wealthiest taxpayers.

For the workers this policy was supposed to help, the results are already clear.

Take Sherie Cummings, who has poured drinks on the Las Vegas Strip for 20 years. Sherie and her husband, also a bartender, earned $60,000 in tips last year. They expected the full deduction the president promised. They got $25,000 of it. The cap.

Thirteen million tipped workers do not need a tax deduction. They need a raise.

For private jet buyers, the same law delivered something different. Full write-offs on aircraft worth $5 to $10 million. And that write-off is permanent. The tips deduction expires in 2028. The Tax Policy Center projects that 60% of the savings from this law will flow to the top fifth of households—those earning more than $217,000 a year. The wealthiest will save millions. Sherie Cummings is putting her refund into savings because she is afraid of what comes next.

For working people, the real problem was never the tax code. It is wages. The federal subminimum wage for tipped workers has been $2.13 an hour since 1991. It was locked there permanently in 1996 by the National Restaurant Association—what we call “the other NRA.” They spent $2.9 million on federal lobbying in 2020 alone to make sure it stayed there. Which is why tipped workers earn a median income of $15,198 a year. Thirty-seven percent of the national median. Which is why they rely on food stamps at nearly double the rate of other workers. And because workers depend on tips from customers to survive, they put up with what no one should have to. Seventy-one percent of women in the industry report sexual harassment. In subminimum wage states, the rate is double what it is in states that require a full minimum wage with tips on top.

Seven states already require a full minimum wage with tips on top: California, Oregon, Washington, Nevada, Minnesota, Montana, Alaska. It is called One Fair Wage. The restaurant lobby warns that tips would disappear, that restaurants would close, that jobs would vanish. These are scare tactics. The seven states prove them wrong. Tips are the same or higher. Restaurant employment grows faster. Small business growth rates match or beat subminimum wage states.

And restaurant workers have organized and fought for years and won One Fair Wage in Washington, DC, Chicago, and Michigan. The restaurant lobby has fought to block and roll back these wins—in Michigan, they are still trying. But workers keep going. And even where implementation is partial, the numbers are in. DC set an all-time restaurant employment record. Tips grew. Chicago saw more than 850 new restaurant licenses and the fastest pay growth in the country.

Cutting taxes on some tips for some workers is not a solution. Raising wages—and ending the subminimum wage—is. That is why more than 100 labor, community, and civil rights organizations have come together as the Living Wage For All coalition. The fight: Raise the minimum wage to meet the cost of living and end all subminimum wages. In every state. For every worker. Campaigns are active in eight states. Workers have already won. And they will keep winning.

Thirteen million tipped workers do not need a tax deduction. They need a raise. Every shift. Every paycheck. Every year.

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