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tipped minimum wage
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.
Apr 18, 2026
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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Bowing to Restaurant Lobby, DC Guts Voter-Approved Plan to End Subminimum Wage for Tipped Workers
"Call it what it is: a pay cut and a betrayal of the working people," said One Fair Wage.
Jul 31, 2025
With backing from the restaurant lobby, the Washington, D.C. city council voted Monday to gut plans to raise wages for tipped workers, which had already been approved by the public.
It's the second time the council has overturned a wage increase for tipped workers that the public voted for, having already done so once in 2018.
Under federal law, tipped workers are allowed to be paid a much lower minimum wage—just $2.13 per hour compared with $7.25 for nontipped workers. Tipped workers are, consequentially, more likely to live in poverty.
This is the case in Washington, D.C., where, according to data from the Bureau of Labor Statistics analyzed by the Economic Policy Institute, 7.7% of tipped workers live in poverty compared to 2.6% of nontipped workers.
In 2022, D.C. voters overwhelmingly voted to address this problem, supporting Initiative 82, which would have gradually raised the minimum wage for tipped workers—just over $5.35 an hour at the time—to match what other workers receive by 2027.
In 2022, D.C.'s standard minimum wage—which increases each year pegged to inflation—was $16.10. As of 2025, it has increased to $17.95.
As the initiative to raise the tipped minimum wage began, restaurant industry lobbying groups like the Restaurant Association of Metropolitan Washington (RAMW) fought tooth-and-nail to roll it back.
In Jacobin, Raeghn Draper wrote that this group, and others like it around the country, "claim to speak on behalf of restaurant workers, but they are not worker organizations."
Instead, Draper wrote, "They are extensions of the National Restaurant Association (NRA), an industry group historically aligned with large corporate chains like McDonald's, Taco Bell, and Olive Garden—none exactly known for their commitment to workers' rights or well-being."
These groups waged an aggressive disinformation campaign, claiming that by phasing out the subminimum wage, restaurants, crushed by their increasing operating costs, would be forced to close en masse.
The RAMW even touted a survey of its own member restaurants purporting to show that 44% of full-service casual restaurants would have no choice but to close their doors by the end of 2025 due to the policy.
As Draper points out, citing data from an independent investigation by D.C.'s Office of the Budget Director, "the number of D.C. restaurant closures in 2024 did rise slightly compared to the previous year, but restaurant openings also increased, outpacing closures by a margin of two to one."
A study by the EPI likewise found that—despite industry claims that the higher wage requirements were forcing restaurants to lay off their employees—D.C. was seeing more employment growth than other towns in the region without requirements to raise wages.
But media outlets uncritically reported the restaurant industry's narrative about mass closures, and their attempts to "manufacture a crisis," as Draper says, paid off.
While making public appearances with restaurant industry lobbyists, Democratic Mayor Muriel Bowser signed legislation halting the wage increases in June—freezing the tipped minimum wage at $10 an hour. She pushed for a full repeal, which would have knocked the tipped wage back down to $8 an hour. But the city council voted it down.
On Monday, despite fierce protests from workers and unions, the city council voted 7-5 to freeze the tipped wage at $10 until July 2026, when it will increase by a measly five cents. They also voted to dramatically slow the tipped wage increases to just 5% each year until 2034, when it will be capped at 75% of the standard minimum wage.
Members of the council, as well as many media outlets, including Axios and The Washington Post, described the decision as a "compromise" between employers and workers. RAMW, which lamented that it was "not a full repeal," has portrayed it that way, though it nevertheless described it as a "win for the industry."
Fair wage activists, however, described it not as a compromise, but an assault on a hard-won democratic victory.
"In what world is this a compromise?" asked One Fair Wage, one of the groups that campaigned for the initiative. "Call it what it is: a pay cut and a betrayal of the working people."
"D.C. Council just voted to overturn the will of the people and freeze wages for tipped workers," said the Fair Budget Coalition in a post on X following the vote. "As rents and other costs rise, it is a CHOICE to maintain a subminimum wage for struggling D.C. residents."
According to EPI, a person living in Washington, D.C. needs to earn just under $31 an hour to afford the cost of living. The average wage paid to tipped workers like bartenders, waiters, and waitresses falls several dollars short of this.
"The voters told us what they wanted when they voted overwhelmingly for I-82—twice—and this is not it," said Brianne Nadeau, one of the council members who voted against reversing the wage hikes. "Restaurant workers and the organizations that represent them have been fighting this battle for wage protections for years, and they shouldn't have to keep fighting it. And this council should not keep on telling the voters they don't know what's best for themselves."
"The council chose corporate lobbyists over tipped workers," said One Fair Wage. To the council members who voted for it, they said: "We see you. We won't forget."
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No Tax on Tips Is a Deceptive Ploy; Congress Should Raise the Minimum Wage Instead
Over the next 10 years, the Raise the Wage Act would have a total benefit to affected workers of $700 billion, compared with about $39 billion from “no tax on tips” in the House bill.
Jun 22, 2025
At President Donald Trump’s direction, Congress is considering proposals to exempt tips from taxable income.
After Trump floated this gimmick on the campaign trail, Republican and Democratic elected officials alike have embraced the idea. The House Republican budget bill (H.R. 1) includes a “no tax on tips” provision that gives the illusion of helping lower-income workers—while the rest of the legislation hands huge giveaways to the rich at the expense of the working class. The Senate recently passed a standalone version of no tax on tips that similarly provides the false impression of aiding workers while giving employers excuses to incentivize tipped work and keep base wages low.
In stark contrast to “no tax on tips,” which excludes workers with the lowest incomes, the largest benefits of the Raise the Wage Act would go to the lowest-paid workers.
If the Trump administration and its allies in Congress genuinely wanted to help tipped and lower-paid workers, there are far better options they could pursue, like raising the federal minimum wage. To illustrate this, we compare the estimated impact of no tax on tips with the Raise the Wage Act of 2025, a bill that would raise the federal minimum wage from $7.25 to $17 an hour by 2030 and gradually phase out the tipped minimum wage. Here is an overview of how the two plans compare.
How Many Workers Would Be Affected? How Long Would Benefits Last?
No tax on tips: Between 2.5 and 5.2 million tipped workers would receive an income tax deduction over the next four years, but benefits would end after 2028.
The Raise the Wage Act: Nearly 23 million workers, including 2.8 million tipped workers, would earn higher wages with no end date—meaning affected workers would continue to benefit indefinitely.
How Much Would These Workers Benefit Annually? How Would Benefits Differ Based on Income?
No tax on tips: Eligible tipped workers would receive an average annual tax cut of $1,700 for the four years it would be in effect. However, the benefits would heavily skew toward higher-income tipped workers. Among all tipped workers, the top 20% would receive an average tax cut of $5,768 while those in the bottom 20% would only get $74 on average. The average for the bottom quintile is small in large part because two-thirds of those workers have incomes so low that they do not pay federal income taxes and thus will not see any tax benefit.
The Raise the Wage Act: Affected workers who work year-round would receive an average wage increase of $3,200 per year. After taxes, the net pay increase would be marginally smaller but still significantly larger than what a worker would receive on average with a tax deduction on tips. In stark contrast to “no tax on tips,” which excludes workers with the lowest incomes, the largest benefits of the Raise the Wage Act would go to the lowest-paid workers.
Who Pays for These Benefits?
No tax on tips: The public writ large would pay. House Republican lawmakers are already proposing massive cuts to social programs, such as Medicaid and food stamps that benefit millions of people (including tipped workers), to offset foregone revenue from no tax on tips and large tax cuts for the rich. The Republican plan would also dramatically increase the federal debt, which could substantially raise borrowing costs for households and businesses in the future.
The Raise the Wage Act: Employers of low-wage workers would pay for these wage increases, absorbing the higher labor costs over time through a variety of channels. Importantly, the Raise the Wage Act not only increases the federal minimum wage but also phases out the tipped minimum wage, a system that has provided employers of tipped workers an enormous—and highly problematic—public subsidy for decades.
While no tax on tips would benefit only the small share of workers who receive tips as a portion of their compensation, the Raise the Wage Act would benefit all low-wage workers in the U.S., including 4.2 million people with incomes below the poverty line. Over the next 10 years, the Raise the Wage Act would have a total benefit to affected workers of $700 billion, compared with about $39 billion from “no tax on tips” in the House bill (see Figure A).
As we at Economic Policy Institute and others have noted, no tax on tips is problematic for a variety of other reasons, aside from its paltry and poorly targeted benefits. The measure that passed in the House caps eligibility to workers in certain tipped occupations earning less than $160,000 in annual income. This will mitigate tax avoidance by the highest earners, but it does not fix other problems, including the fact that ending taxation of tips would likely expand employer use of tipped work—a system already rife with discrimination and worker abuse. No tax on tips would also undercut efforts to raise worker compensation while depleting tax revenue for public services. By subsidizing the use of tipping in the federal tax code, no tax on tips would further cement a system that lets employers off the hook from paying their workers a fair wage—in this case, forcing taxpayers to foot the bill. In contrast, the Raise the Wage Act gives workers a durable wage increase paid for by those who should be paying—their employers.
Beyond raising the minimum wage, there are several other effective and more equitable policies to support working families—including expanding the Earned Income Tax Credit and Child Tax Credit, providing workers with paid sick leave and paid family and medical leave, and supporting workers’ rights to form and join unions. But Trump and congressional Republicans, while claiming to support workers, have not pursued these policies. Instead, they have relentlessly attacked workers, and pushed an enormous tax cut for the wealthy—paid for by cutting essential social programs for low-income people and children and adding trillions to the public debt. As many as 16 million people would lose their health insurance under the House budget bill.
The Raise the Wage Act is by no means an outlier or a radical exercise in messaging—it’s cosponsored by majorities of House and Senate Democrats. If even a few Republicans were willing to support it, it could easily have the votes to pass. No tax on tips, on the other hand, remains a deceptive ploy that would provide few benefits to workers and fail to offset the harm the Republican budget bill would impose on millions of workers and families.
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Michigan Governor Accused of 'Wage Theft' for Signing Tipped Minimum Wage Legislation
"Once again, Democrats have thrown working people under the bus, this time in Michigan," said one critic.
Feb 21, 2025
Economic justice advocates excoriated Michigan Gov. Gretchen Whitmer on Friday after the Democrat signed legislation that, while speeding up the state's increase to a $15 hour minimum wage, could leave tipped workers earning less than they would under a system imposed last year by the state Supreme Court, according to critics.
Whitmer signed a pair of bills changing the state's minimum wage, tip credit, and paid sick leave law following an eleventh-hour legislative compromise, explaining in a statement that "Michigan workers deserve fair wages and benefits so they can pay the bills and take care of their family, and small businesses need our support to keep creating good jobs."
Abigail Disney, a member of the group Patriotic Millionaires, said in a statement, "Once again, Democrats have thrown working people under the bus, this time in Michigan under the stewardship of Gov. Gretchen Whitmer."
"In its quest to rebrand itself and win back the working-class vote, Democrats needed to present a unified front in this pivotal moment in Michigan—and anything less than that, which this is, should be taken as an abysmal failure," Disney continued.
"This is the unfortunate but predictable outcome of a party that has proven itself over the years to be for sale to the highest bidder. Voters will definitely notice, and Democrats shouldn't expect them to forgive and forget at the polls in 2026 and beyond," she added.
In 2018, advocates drafted ballot initiatives aimed at expanding paid sick leave and raising the state minimum wage, which was then $9.25 an hour. But Republican state lawmakers moved to block the measures by maliciously adopting and then favorably amending them. Last July, Michigan's Supreme Court ruled this "adopt and amend" tactic unconstitutional and ordered the initial sick leave and minimum wage proposals to take affect at midnight on Friday.
By signing one of the bills, S.B. 8, Whitmer leaves in place a system in which tipped workers' minimum wage will be $4.74 instead of $6 under the court-ordered plan. Customer tips are counted upon to close the gap between the tipped and regular minimum wage of $12.48 per hour. Employers must pay the difference if workers don't reach that amount with tips.
While the Michigan Restaurant and Lodging Association welcomed Whitmer's move, John Driscoll, author of Pay the People! Why Fair Pay Is Good for Business and Great for America, said in a statement that "restaurant lobbyists in Michigan may say that they 'won' this battle in preserving the subminimum wage for tipped workers, but in the end, their efforts will only hurt themselves and their state's economy."
"I know from my own experience as the CEO and chair of businesses that pay people stable and fair wages that doing so is best for workers, businesses, and the broader economy," he continued. "When workers have economic security, they are more loyal and productive, which will help businesses and stimulate growth."
"Contrary to what restaurant associations may claim, everybody lost today when Gov. Whitmer signed S.B. 8 into law," Driscoll added. "Tipped workers lost. Businesses lost. And the Democrats lost too when they sacrificed the most vulnerable workers in Michigan to lobbyists."
The advocacy group One Fair Wage accused the governor of "stripping millions of dollars" from Michigan workers' paychecks.
"Michigan's highest court ruled that these wage increases should take effect," One Fair Wage president Saru Jayaraman said in a statement. "Michigan workers have already earned this raise, and taking it away is not a compromise—it is wage theft. We are mobilizing to ensure voters—not politicians—have the final say on whether these protections remain in place."
One Fair Wage said: "If enough valid signatures are collected, S.B. 8 will be blocked from implementation, and the 2024 Michigan Supreme Court decision requiring that all workers receive a raise to $15 an hour with tips on top will go into effect. The referendum will thus ensure that Michigan voters—not politicians—decide whether these wage increases stand."
One Fair Wage must gather 223,099 valid signatures to suspend S.B. 8 and leave the matter up to Michigan voters.
Meanwhile, the federal tipped minimum wage remains stuck at $2.13 an hour, where it's been since 1991. The federal minimum wage has been $7.25 since 2009.
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No Taxes on Tips? There Are Better Ways to Help Low-Wage Workers
Raising the federal minimum wage and ending the subminimum wage for tipped workers are good places to start.
Aug 30, 2024
With the race for the White House heating up, a curious policy idea appeared seemingly out of nowhere: ending federal taxes on tips. While this policy shift may have wide appeal—most people aren’t going to say no to a tax cut—it would not translate into real benefits for workers struggling to make ends meet. In fact, it could do harm, and it may even deliver a new tax perk to the rich.
“No taxes on tips” makes us think it would benefit certain workers: the restaurant server pulling a double shift to pay the rent or a member of the cleaning staff at a major hotel chain. Surely these workers deserve better—and what could be better than giving them a chance to save on their tax bill?
It’s not so simple. For starters, tip workers make up a small fraction of the U.S. workforce—about 2.5%—and more than one-third of them do not even earn enough to pay income taxes in the first place. Cutting the federal tax does nothing for this group, except reduce the amount that they contribute to Social Security. Some of these workers could also lose out on other vital programs, like the Earned Income Tax Credit.
While there are still almost no details about how a tax-free tips policy would work, there is the very real possibility that wealthy earners would take advantage of any new system to shield their earnings from federal income taxes.
There are better options than a poorly designed “no tax” gimmick that leaves behind the majority of tipped and other low-wage workers. To win better pay for workers, we could start with raising the 15-year-old $7.25 federal minimum wage to at least $15 an hour. This would provide a more significant boost; about 1 in 8 workers earn less than $15, and most are in the states that have a $7.25 minimum wage.
What’s worse, tipped workers may be paid a subminimum cash wage by their employer that is as low as $2.13 per hour, an amount frozen in place in 1991 at the federal level. This is designed to benefit employers, not workers; the $5.12 difference between the federal minimum and subminimum wages is known as the “tip credit.” In effect, this is the portion of workers’ wages subsidized via customer tips.
These tip credits across the United States are at least $9 in nine states, and more than $11 in Delaware and Maryland. They represent enormous wage subsidies to employers for each and every hour a tipped worker works. It’s no wonder that consumers are showing signs of being “tip-tired”—it is past time to phase this policy out.
While there are still almost no details about how a tax-free tips policy would work, there is the very real possibility that wealthy earners would take advantage of any new system to shield their earnings from federal income taxes. Without adequate safeguards, some high earners would simply reclassify a portion of their income as tips. This would represent one more avenue for the wealthy to avoid paying their fair share.
Historically, the tipping economy has always been about denying workers a fair wage. It is a practice that dates back to the feudal systems of the Middle Ages and the post-Civil War period here in the United States, when white employers used it to deny formerly enslaved Black workers a fair wage for their labor. Today, tipped workers are often forced to deal with unexpected fluctuations in pay and scheduling and often lack access to employer-provided healthcare, paid sick leave, or holiday pay.
There are plenty of policies that would improve the lives of low-wage workers—raising the federal minimum wage, for starters, and ending the subminimum wage for tipped workers is a good place to start.
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Harris Urged to End Subminimum Wage, Not Just Taxes on Tips
"Focusing on tax relief distracts from the real solution: the need to end the subminimum wage, which is a direct legacy of slavery and contributes to the worst sexual harassment of any industry in America," said the president of One Fair Wage.
Aug 12, 2024
Economic justice advocates expressed appreciation for U.S. Democratic presidential nominee Kamala Harris' elevation of working class issues in her campaign at a rally in Las Vegas over the weekend, but called on the vice president to go beyond promises her Republican opponent has made and instead counter them with a plan to eliminate subminimum wages across the economy.
On Saturday, Harris expressed support for eliminating taxes for tips. The median tipped worker earns just $15,198 per year.
"It is my promise to everyone here when I am president, we will continue our fighting for working families of America including to raise the minimum wage and eliminate taxes on tips for service and hospitality workers," said Harris.
The vice president's pledge came weeks after One Fair Wage (OFW), a grassroots group fighting for policies that would "require all employers to pay the full minimum wage," published a report showing that ending taxes on tips would not help many of the people earning subminimum wages, as people across the restaurant industry and hundreds of thousands of workers with disabilities do—partially because many of these workers don't earn enough to pay income taxes in the first place.
"It's encouraging to see the Harris-Walz campaign focusing on the economy and the needs of tipped workers," said Saru Jayaraman, president of OFW, on Sunday. "The fact is two-thirds of tipped workers don't earn enough to pay income tax—and that's because of the racist, sexist subminimum wage that really should be the focus of Harris and [vice presidential candidate Gov. Tim] Walz's ire."
The report published in July by OFW—Short Changed: Ending Income Taxes On Tips Will Not Make Subminimum Wages Livable—was aimed at debunking the claim by Republican nominee Donald Trump and other Republicans, including Sen. Ted Cruz (R-Texas), that ending taxes on tips would meaningfully increase tipped workers' earnings.
A bill proposed by Cruz would leave out 95% of low- and middle-wage workers, the report noted, and "even among the one-third of tipped workers who would benefit from this tax relief, this tax relief would be experienced once a year at tax time, and would not relieve their need to pay rent and bills all year round."
Unlike exempting tipped workers from taxes, "providing these workers with a full, livable minimum wage with tips on top would significantly improve their economic stability and workplace safety," reads the report.
As Common Dreams reported in June, OFW dismissed Trump's pledge to eliminate income taxes on tips as "pandering" to low-income households, and the Culinary Workers Union Local 226 said that while "relief is definitely needed for tip earners... Nevada workers are smart enough to know the difference between real solutions and wild campaign promises."
David Dayen, executive editor of The American Prospect, noted that the culinary union supports eliminating the subminimum wage for tipped workers, which Nevada did at the state level last year.
"If Harris was looking to counter Trump's no taxes on tips, she could've endorsed ending the subminimum wage, which is much better policy," said Dayen.
The culinary union announced its endorsement of Harris last Friday, ahead of the vice president's rally, saying its members believe Harris will "tackle issues that are important to guest room attendants who clean hotel rooms, cooks who make gourmet food, and the tip-earning servers who deliver cocktails and unparalleled hospitality."
The union noted on Sunday that Harris had also pledged at the rally to "raise the minimum wage across the country."
The Nevada Current reported on Monday that the union and other advocates for economic justice, including U.S. Rep. Steven Horsford (D-Nev.), "hope to capitalize on a popular proposal to eliminating taxes on tips to push for a federal ban on letting employers pay tipped workers subminimum wages."
Horsford told the outlet that he is working with other House members to draft a bill that would end the federal subminimum wage, which is $2.13 per hour for tipped workers.
"Some of these employers are trying to keep workers at poverty wages," he told the Current. "We need to break that. We need to break this idea that people can work for less than a fair minimum wage and for me that's a livable wage."
Supporting such legislation, said Jayaraman, "is where the Harris-Walz campaign can make their mark—and make a real, meaningful difference in the lives of tipped workers."
"Focusing on tax relief distracts from the real solution: the need to end the subminimum wage, which is a direct legacy of slavery and contributes to the worst sexual harassment of any industry in America," said Jayaraman. "The Harris-Walz campaign should be calling for all workers to be paid a livable minimum wage with tips on top."
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Workers Reject Trump 'Pandering' on Tipped Wages—But Have Message for Democrats Too
"Every poll has the cost of living, economy, and jobs with living wages as the top issues," said one campaigner. "And... the response we're getting is, 'Well, the economy is great.'"
Jun 10, 2024
A leading labor advocate on Monday dismissed former U.S. President Donald Trump's pledge to eliminate taxes on tips as "pandering" to working people and said the promise doesn't address the fact that low-wage workers need a living base wage to afford necessities—but warned that the Republican's comments reveal a shortcoming in the Democratic Party's economic justice record.
As Saru Jayaraman, president of One Fair Wage, told Common Dreams, Trump's pledge at a rally in Nevada on Sunday should be seen as "a call to Democrats who have yet to come out at any level, calling for what workers really do need this year: a living wage."
In Las Vegas on Sunday, the presumptive Republican presidential nominee told a crowd that the "first thing" he would do if elected to a second term would be ending taxation on tips, which the Internal Revenue Service (IRS) currently taxes as part of workers' regular income.
"For those hotel workers and people that get tips, you're going to be very happy," said Trump. "Because when I get to office, we are going to not charge taxes on tips... It's been a point of contention for years and years and years."
Jayaraman said that while workers complain about taxed tips to her organization—which includes nearly 300,000 restaurant and service workers and advocates to end all subminimum wages in the U.S.—eliminating those taxes would not address the current affordability crisis, which has been reflected in numerous polls that have shown the top concerns among voters to be the cost of housing and other essentials.
"The restaurant industry has used tips for 150 years in place of what people need, which is a stable, base living wage with tips on top," Jayaraman told Common Dreams. "It is helpful, for sure, to not have your taxes tipped, but that is a red herring. That should be on top of what workers really need."
"It is helpful, for sure, to not have your taxes tipped, but that is a red herring. That should be on top of what workers really need."
Jayaraman pointed out that the Republican Party does not "even believe in a minimum wage, let alone a livable wage."
Dean Baker, senior economist of the Center for Economic and Policy Research (CEPR), suggested working-class voters should not be fooled by Trump's unserious comments.
"I realize that Trump doesn't believe in thinking, but exempting tips from taxes will just encourage more employers to expect workers to get more of their pay in tips," Baker said. "This is horrible for workers, since they need a regular paycheck. They shouldn't have to depend on customers feeling generous. But I'm sure this is too complicated for Donald Trump."
In Nevada, Trump's comments did not sway the Culinary Workers Union Local 226 and Bartenders Union Local 165 , which represents 60,000 workers in the battleground state, toward the former president, who was convicted on 34 felony counts of falsifying business records on May 30.
"Relief is definitely needed for tip earners, but Nevada workers are smart enough to know the difference between real solutions and wild campaign promises from a convicted felon," said Ted Pappageorge, secretary-treasurer for the culinary workers' union, in a statement.
Despite what critics recognized as overt "pandering" to working people on Sunday, Trump's campaign has repeatedly emphasized how his tax policy plan, if reelected, would help the wealthiest Americans and corporations.
In May, the former president told oil executives that if they help raise $1 billion for his campaign it would be a "deal" because of what they would save on taxes if he were to be reelected. Trump has promised to extend his 2017 tax cuts, which disproportionately benefited corporations and the wealthy.
President Joe Biden has said he would allow Trump's tax cuts for people earning over $400,000 per year to expire if he wins a second term. He has also called for a wealth tax on individuals with more than $100 million in assets.
On social media, Trump said after his rally on Sunday that Biden has tried "to TAX more and more of [workers'] Tips, even hiring 88,000 IRS Agents to collect!"
The increased IRS funding supported by Biden and included in the 2022 Inflation Reduction Act has actually been aimed at cracking down on wealthy tax evaders; last month the IRS said its audit rate for people earning more than $10 million per year is expected to go up 50% by 2026.
Jayaraman warned that despite Biden's efforts to introduce more fairness into the tax code, voters have not heard enough from the federal government about working people's struggles to afford essentials like groceries, housing, childcare, and transportation.
"We've not seen most federal folks run on what people really are needing," said Jayaraman. "So if you look at the polls of youth and black voters and Latinx voters, every poll has the cost of living, economy, and jobs with living wages as the top issues. And... the response we're getting is, 'Well, the economy is great. Stock market's up, GDP is up, unemployment is down. People just must not understand the economy.' And I think who's not understanding is [elected officials] who look at those polls and don't understand that what workers are talking about is not the economy, but their economy, their ability to pay for eggs and gas and housing right now."
To combat Trump's pandering, Jayaraman added, Democrats must run on "what people are prioritizing right now, which is their wages and their ability to pay for things."
Jayaraman urged Democratic lawmakers to show that they are prioritizing living wages by supporting legislation that would include raises for tipped workers in states including Ohio, Arizona, Massachusetts, and Michigan.
Elected officials "could go to these states and say, 'You can vote yourself a raise this year, and we support it,'" said Jayaraman. "'Yes, we've done some things, but we know you're struggling and... you have to reelect us to get the job done. And in the meantime, you can go vote yourself a raise this November in these states.' That should be the message."
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The National Restaurant Association Spends Big to Keep Wages Low
May 14, 2014
The National Restaurant Association: Hard to StomachLearn more and take action: https://bit.ly/HardToStomach McDonald's, Olive Garden and Burger King are just some of the ...
A majority of the Senate voted to raise the minimum wage to $10.10 per hour recently, yet the bill failed to clear the 60 vote hurdle necessary for passage -- thanks in no small part to the political power of the National Restaurant Association, the restaurant industry's trade association.
For years, the "Other NRA" has flexed its political muscle to keep wages low and to freeze the tipped minimum wage at just $2.13 per hour. Plus, thanks to non-stop NRA lobbying, the House last month passed a bill changing the threshold for employer-provided coverage under the Affordable Care Act to deny healthcare to employees who work 30 hours per week.
This is thanks in no small part to the Other NRA's super-sized political giving. According to an analysis by the Restaurant Opportunities Center United (ROCUnited), the $683 billion industry's trade association itself has poured $12.6 million directly into federal politicians' campaign coffers since 1989. NRA member organizations have chipped-in around $51 million more: McDonald's, for example, has given $5.8 million to federal politicians, Darden (parent company of Olive Garden, Red Lobster, and Capitol Grille) $5.6 million, and Wendy's $2.3 million. The biggest spender is NRA member Walt Disney; the creator of Mickey Mouse and Donald Duck disclosed $14.1 million in contributions since 1989.
The NRA has also spent millions on the state level. It has worked with the American Legislative Exchange Council (ALEC) to quash local efforts to enact paid sick leave ordinances -- in Oklahoma, for example, the state NRA affiliate worked with Governor Mary Fallin (an ALEC alum) to crush both paid sick leave ordinances and minimum wage ordinances in one fell swoop.
Notably, as the restaurant industry pours tens of millions into politics and fights to keep wages low, it has seen five solid years of record-breaking profits and growth: the industry is expected to increase its profits by $24 billion in 2014, and hit $683 billion in sales.
Super-Sized Political Giving
For decades, the NRA's political spending has bought it mountains of influence.
In the 1990s, it served up enough campaign contributions to persuade Congress to set the minimum wage for tipped workers at just $2.13 an hour. This archaic provision means that big restaurant chains have managed to shift responsibility for paying their workers onto us, the consumers.
That's not the only avenue through which the NRA's political spending leads to a public dunning. Thanks to an abysmally low minimum wage for tipped workers at restaurants like Olive Garden and non-tipped workers at McDonald's and Wendy's, nearly 60 percent of the $600 billion restaurant industry's employees are low-wage workers -- meaning they are twice as likely to be on public assistance as the rest of the population. The National Employment Law Project estimates that the public assistance provided to fast-food workers costs taxpayers at least $3.8 billion a year. Taxpayers fund McDonald's employees to the tune of $1.2 billion a year in public assistance. The majority of restaurant workers are adult women, many with kids to support.
While moms and kids are struggling, restaurant CEOs are enjoying eye-popping salaries subsidized by the taxpayers. According to a report from the Institute for Policy Studies, big restaurants have exploited a tax loophole to write off more than $200 million in executive "performance pay" over just the past two years. In other words, we as consumers are not only stuck with paying restaurant workers' wages, but we as taxpayers are stuck subsidizing the industry's profits with public assistance programs for their underpaid employees and corporate welfare for their overpaid CEOs.
A Side of Revolving-Door Lobbying and a Dash of Front Groups
The NRA's political giving is served with a side of influence-peddling. Between 2008 and 2013, the NRA more than doubled its count of registered lobbyists, from 15 to 37. At least 27 of the NRA's lobbyists have come through the "revolving door," meaning they jumped from Congressional jobs to lobbying gigs, and then play off their contacts inside the government to advance the restaurant industry's interests. What's more, the NRA's top member companies -- Darden, YUM! Brands (parent of Taco Bell, KFC, and Pizza Hut), Walt Disney, McDonald's, Marriott, Sodexo, Aramark, Starbucks, and Coca-Cola -- added another 127 registered lobbyists last year. That's a lot of lobbying power.
In addition to its own paid lobbyists, the industry employs a crew of surrogates to do its dirty work in the public sphere.Salon just reported that the NRA is meticulously tracking the activities of fast food worker advocates and worker advocacy organizations. Salon reports that the Other NRA approved an "additional" $600K to attack ROCUnited. The Other NRA also appears to back groups like ROCexposed.org (a front group linked to notorious astroturf flak Richard Berman), as well as prominent economists like Douglas Holtz-Eakin who push anti-minimum wage rhetoric.
Another example of restaurant industry astroturf is the Employment Policies Institute, which poses as a "think tank" and commissions reports and runs ads and op-eds opposing minimum wage hikes. But EPI is run out of the offices of Berman & Co., Berman's PR firm, which represents the restaurant industry -- although over 80 percent of journalists fail to disclose those ties. Other Berman projects also advance the restaurant industry's agenda: front groups like the "Center for Consumer Freedom" have fought for years against indoor smoking bans and nutrition labeling requirements, which the industry has long opposed.
NRA "Made a Huge Difference" In Blocking State Minimum Wage Increases
And that's just on the federal level. The NRA and its state chapters have given millions more to state and local candidates, and spent countless millions more on state-level lobbying. And in recent years, the NRA has been at the forefront of the push back against state and municipal efforts to enact their own minimum wage increases and paid sick day requirements.
Last June, the NRA boasted that its state chapters "made a huge difference" and "played an active role" in blocking higher wage laws in over a dozen states. And, it has been the biggest opponent of paid sick day laws in states across the country -- it has even pushed a bill at ALEC to prohibit local governments from requiring employers provide paid sick days to their workers, which has since spread across the country.
Most recently, the Oklahoma NRA affiliate helped push SB 1023 to crush local efforts to guarantee a fair wage and paid sick days in that state; it was signed into law in April by Governor Mary Fallin, an ALEC alumni who gave the keynote at ALEC's spring meeting last year.
Despite broad popular support for an increase in the minimum wage among both Democrats and Republicans, the Other NRA has managed to stick a fork in the measure in the U.S. Senate for now. Stay tuned, however. Advocates are planning more street heat this summer and during the fall election cycle to convince Congress that America needs a raise.
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