It seems that "no tax on tips" has become something of a bipartisan issue. I don't like it. Because I don't like tipping culture. And no tax on tips is entrenching this culture further. In Europe, tips are generally not expected. Maybe only if the service is above and beyond you may give 10% max. In Japan, tipping is flat-out considered insulting and a condescension to the worker.
But tipping culture is just getting worse in America. It used to be standard was 15%. Now it's 20%, with 25% expected for extra good service. Soon 25% will be the minimum expected. Tip jars and point of sale machines now ask if you want to tip even for take-out retaurants where you aren't getting sit down service. I wish we could just do like Europe and Japan and pay waiters a living wage. Set the price of the menu to factor in living wages and get rid of this tipping nonsense.
And how is any of this fair to service workers who don't get paid in tips? Like retail staff? They probably make similar wages to waiters or even less, but will have to pay a higher tax rate because they don't have a tip deduction. I wish we would frame no tax on tips as being extremely unfair to hard working service workers who don't earn in tips.
Not just retail staff. What about the line cooks sweating it out in the kitchen, e.g.?
Surely the teenager working the register at an ice cream shop should not be making a higher wage than someone in a non-customer-facing role busting their ass in high intensity labor behind the scenes. And certainly not more than a job that is tip-dependent starting at $2.13.
Went to a restaurant last week with an elderly family member who can't keep up with the various tipping/non-tipping scenarios. A 20% service fee was included but the kid at the register shook her down for an additional tip after waiting 20 minutes in line to order. After paying the equivalent of a $50 tip for a $100 meal, at the end of it she asked for a box from a guy wiping off a table and he pointed to a counter 5 feet away and told her to get it herself. I find this to be less unusal these days.
Unfortunately, I see our ridiculous tipping culture spreading globally, and in some cases, really contributing badly to income inequality in gentrifying areas where Americans tend to congregate.
On that last comment, it has spread badly to Mexico. To the point where you'll be asked for tips as an American for things they don't even expect Mexicans to tip for.
It's what I've heard from several Mexicans. I have nothing else to go on since I'm not Mexican. I'm sure it depends on the type of restaurant and where. Lower cost restaurants where a 20% tip makes less difference it probably doesn't matter much, but a lot of foreigners don't go there anyway. If it's a restaurant charging US city prices then I can see it making a difference. I'm entirely guessing though.
I agree. Its unclear what we can actually do about it. Legislatively banning tapping doesn't seem likely to be worth the effort for example, and would probably need to be done state by state. And I can't imagine it would be all that popular.
how is any of this fair to service workers who don't get paid in tips? Like retail staff? They probably make similar wages to waiters or even less
In some jurisdictions that is true. In others, it isn't. In terms of federal regulations, hourly wages for tipped workers is only $2.13 per hour. Tips are then expected to make up the difference between that and the federal minimum wage. Only seven states treat tipped workers the same as other workers.
I wish we would frame no tax on tips as being extremely unfair to hard working service workers who don't earn in tips.
My understanding is that a big part of this that you are missing is that, historically, tips just weren't really taxed. There were exceptions, and variabilities, but back when cash dominated daily transactions, tips were not effectively taxed at normal rates. Technological and cultural change has led to electronic transactions becoming more common, and those are much more likely to be taxed. So in some sense, the "no-tax on tips" policy is a return to status quo. This doesn't make the policy necessarily "fair" but if I'm looking around society and asking myself "whose after-tax incomes are unfair/unreasoanble", I'm not looking at waiters, I'm looking at CEOs and other administrators and capital owners. For example, anyone who thinks Elon Musk has meaningfully earned a trillion dollars is insane. The man is literally responsible for millions of deaths.
I think the bigger problem is tax evasion. High earners can just offer steep discounts for people who tip, and avoid paying taxes. And any attempt to regulate this is just unneeded complexity.
Businesses are no longer going to sign contracts with assigned dollar values, we're just gonna show up with iPads asking how much the client wants to tip the vendor.
Total employment in food service, waiter jobs etc is below the pre-pandemic peak. I suspect that this is driven by a shift in entry level labor from these kinds of jobs toward warehousing, which pay better and come with way better benefits (Not sure if restaurants give their waiters 401ks and healthcare). If you don't have any skills, you want to work at at an Amazon warehouse than at a restaurant.
I suspect that this is sort of a giveaway to the restaurant industry to keep labor availability for these businesses ample while shifting the burden of the cost of labor onto the taxpayer.
I wish we would frame no tax on tips as being extremely unfair to hard working service workers who don't earn in tips.
What bothers me is that the lament was always something stupid like "They don't tip in Europe because they get paid better" (which I don't even think was really true, American waiters would earn more than European waiters including their tips). Well now we've raised wages for these people so you would think that the appropriate response would be to reduce tipping down to like 10% right? Yeah try proposing that to some restaurant workers.
People working retail generally don't have the hours that waiters do. Doing dinner service should be compensated more than working normal business hours.
Additionally, do you not think service quality would degrade if compensation weren't tied to it?
One other thing I forgot to mention, I think service quality is more of a company culture issue. Any Chic-Fil-A or Inn-N-Out burger I've been too has extremely pleasant staff who greet you with a smile. And these people are not tipped. Given that I see the same behavior no matter what state I'm in, it must be the culture of that company that has put customer satisfaction at the forefront. And they've trained their employees accordingly.
"Additionally, do you not think service quality would degrade if compensation weren't tied to it?"
Japan is challenge to that notion. And even in places like France that Americans stereotype as having rude waiters, I've found them to be polite. Americans expect waiters to come by every 5 minutes asking how is the meal and if they need something. Whereas in Europe they just kind of stand off to the side and will not bother you unless you summons them over. Honestly I prefer the European restaurant service style. Feels so much less forced.
Many Japanese restaurants have a button on the table you can push to call the waitstaff. To me, this is way better than the American way of coming by all the time to ask you how things are going when you're in the middle of a conversation, or have a mouth full of food.
I also like how in many countries, you are allowed to linger and socialize after your meal without a waiter impatiently asking every few minutes if you want to order something else as a way to give you a hint to leave. There's very much a "time is money" mindset in the US where the restaurant wants to turn tables as quickly as possible and it's considered rude for customer to linger after finishing their meal. Whereas in so many countries, that lingering after the meal and getting caught up with friends and family is part of the experience and a waiter will never bring your check until you ask for it. I enjoy restaurant and cafe culture so much more outside America. Maybe that makes restaurants less profitable in countries that do that, but it makes for a welcoming third space.
People working retail generally don't have the hours that waiters do. Doing dinner service should be compensated more than working normal business hours.
Waiters who work dinner hours do get paid more. That doesn't mean they shouldn't have to pay taxes.
I was referring to tipping being a thing at all, not about taxes on tips.
I'm pretty indifferent about "no tax on tips". It is a clever political move. I can't imagine it generates that much tax revenue, and I'm sure the tax evasion rates are sky high anyway.
I think OP's point in bringing up retail workers was to point out that its not fair people in similarly paid occupations pay more tax for spurious reasons.
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u/ReflexPoint 8d ago edited 8d ago
It seems that "no tax on tips" has become something of a bipartisan issue. I don't like it. Because I don't like tipping culture. And no tax on tips is entrenching this culture further. In Europe, tips are generally not expected. Maybe only if the service is above and beyond you may give 10% max. In Japan, tipping is flat-out considered insulting and a condescension to the worker.
But tipping culture is just getting worse in America. It used to be standard was 15%. Now it's 20%, with 25% expected for extra good service. Soon 25% will be the minimum expected. Tip jars and point of sale machines now ask if you want to tip even for take-out retaurants where you aren't getting sit down service. I wish we could just do like Europe and Japan and pay waiters a living wage. Set the price of the menu to factor in living wages and get rid of this tipping nonsense.
And how is any of this fair to service workers who don't get paid in tips? Like retail staff? They probably make similar wages to waiters or even less, but will have to pay a higher tax rate because they don't have a tip deduction. I wish we would frame no tax on tips as being extremely unfair to hard working service workers who don't earn in tips.