LAS VEGAS, Nev. (FOX5) – It’s something that has a lot of people talking in the Las Vegas valley, after a major campaign pledge from both former president Donald Trump, and Vice President Kamala Harris.
Both say if elected, they’ll get rid of taxes on tips.
As for the tip economy in Southern Nevada, it’s home to one of the largest populations of tipped workers in the nation.
FOX5 heard from those this would directly impact, and heard from a local tax expert on the overall economic impact if this legislation were to pass.
Las Vegas cocktail server, Alexis White says not getting taxed on her tips would be lifechanging, which is important, since she says several former colleagues left Las Vegas since they couldn’t make ends meet in the service industry after the pandemic.
“There’s tons of people who have quit their jobs, who have moved other places,” White said.
White is part of the Culinary Union. The union and its affiliates represent 60,000 workers in Las Vegas and Reno, including at most of the casino resorts on the strip and Downtown Las Vegas.
This current push for no taxes on tips is something White says most Culinary Union workers stand behind, because they’re not guaranteed their tips.
“That’s the biggest problem with the system is I am not guaranteed to make a certain amount of money,” White said. “Yet I am guaranteed to have to pay the taxes on that amount of money. So, how does that work?”
Lifelong Las Vegas resident, and Certified Public Accountant and Managing Partner at Rich Wightman & Company, John Wightman says it’s a positive thing adding, “it’s a targeted tax reduction that is going to have national benefits for people working at Denny’s to people who are working at the MGM or Venetian or one of our larger properties.”
However, Wightman did address the obvious that no taxes on tips would reduce revenue.
“The impact is going to be obviously, less dollars are going to be put into the tax system, which is going to require some cuts to have to be made, and some programs and things like that,” Wightman said. “That will just take judicious overwatch by our governors, our senators.”
In what’s shaping up to be a contentious election year, the no taxes on tips idea seems to be resonating across party lines.
Democratic U.S. Senator, Jacky Rosen supports it, and Republican Governor, Joe Lombardo backs the idea, providing FOX5 this statement on Friday writing, “Nevadans in the service industry work hard to provide exemplary service to customers and to provide a great quality of life for their families — and they deserve to keep every tip they’ve earned.”
Economists tell FOX Business that eliminating a source of income taxes means the Social Security program will take a big hit.
Critics also worry about a shortfall of tax revenue with a federal deficit over $1 trillion and the national debt above $35 trillion if a source of income taxes get eliminated.
IRS figures show American workers paid $38 billion in taxes on tips in 2018.
The median earning for wait staff in the U.S. is about $32,000 a year or $15.36 an hour, according to numbers from the U.S. Bureau of Labor Statistics.
Detractors say there should be a flat tax where everyone pays the same amount. But White says, the same amount doesn’t make financial sense across the board.
“Of course, we want to pay taxes, of course. But we want to pay fair taxes, and that’s not what’s happening,” White said. “We need help from our politicians to get it right.”
Just this week, the White House press secretary said if it reached his desk, President Biden would “absolutely” sign legislation to eliminate taxes on tips.
When it comes to no taxes on tips, Trump accuses Harris of stealing his idea, after both candidates presented it months apart in separate rallies in Las Vegas.
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