Beware the logical fallacy. "A implies B" does not mean that "not A implies not B".
Workers who earn too little to pay taxes (A) will not benefit from a tax cut (B).
But workers who earn enough (not A) may still not benefit (not B), for example because their employer indirectly pockets the difference. That is actually being argued in the article.
So this is indeed the appropriate way of formulating the statement: at least 40% of workers will demonstrably not benefit from this.
I can't read this article because of the paywall. Are they saying that taxable tips are subject to payroll taxes (which employers pay out of pocket)? That would actually benefit both employers and employees in some sense.
Some tipped workers, like bartenders, can make more in tips than a junior software engineer lol. Less taxes definitely helps their cause.
If you are concerned with indirect effects, there's quite a few pros and cons that you could extrapolate from the no tax on tips policy. These arguments are far less compelling in general.
That's...not how it works, like, at all. It's a tax credit, not actual money that you pocket additionally from your existing paycheck. It also only lasts until 2028.
> I can't read this article because of the paywall
I just turned on reader mode in Firefox and then refreshed the page and got the article. I'm surprised how often it works. It often doesn't but sometimes it does.
In that case B would be "is not taxed on the income" and A is "part of the 40%" making the statement not B implies no A: "If you are taxed on your tips that implies you are not part of the 40%".
That seems correct. It's a pretty useless statement, but it is true.
it will absolutely affect the wage they are paid, it will be used as a constant excuse to not pay more than the legal minimum (2.13/hr as long as tips are greater than $7.25/hr)... probably used to justify additional tip stealing that happens pretty much everywhere, people will tip less because of it
This is nonsense for most jobs, and it's nonsense here too. Very rarely are any jobs treated on pure merit of good vs bad performance. Ultimately it ends up being mostly the luck of having reasonable management and good opportunities. Reasonable management is very hard to come by in the restaurant industry.
And either way, if you wanted to believe the merit-based approach, you're talking maybe the top 5% of servers anywhere making "good" money. Wage theft in the industry is colossal.
I will be pleasantly surprised if the removal of tax on tips does absolutely anything to move the needle for the bottom 95% of servers.
The restaurant industry has been lobbying for this to further avoid the pressure of raising wages and the complication of reporting taxes — the reasoning is out there in the open.
This is the sort of modern shell game where corporate interests further obscure costs to trick the lower class into thinking it's a good deal. It's akin to the math on maintenance Uber drivers tend to fail to do when they're calculating their wages... they're absolutely getting hosed and most of them don't even understand how.
You can just look this up, it's not a secret. Median total pay, including tips, in the US is $32k for waiters. In France, it's €22k. The UK is £23k. Even factoring in health insurance costs — ~4.5k/year for an Obamacare plan — waiters make more in America.
Waiters in the US make significantly more than their British and French counterparts, due to tipping: the US minimum wage is lower than the British and French minimum wages, and despite American waiters being paid at an even lower hourly rate than the US minimum wage, they end up making more due to tips, performing the same job.
The upper 25% of waiters in the US make over $40k a year. Your 95% estimate is very off base.
$32k = 27.5k€, and if we include the insurance numbers you provided: $27.5k = 23.5k€
> waiters make more in America
By apparently 1.5k€ per year? Not a strong argument as it stands and we haven't even begun talking about the lifestyle and workplace differences between the two countries.
Waiters in the U.S. make more, due to tips, despite the U.S. having a lower minimum wage. Do you think American waiters want to make $2k/year less? That's nearly 10% of their income.
And that's before even factoring in the tax benefits, which is exactly what this article is about! No tax on tips means nearly all of that income is untaxed. French waiters pay 11% taxes, and British ones are in a 20% tax bracket. The difference widens even further.
Tips allow American waiters to earn more, and no tax on tips makes them take home even more. Hand-wringing about how the American system pays less than the European one is innumerate.
The tax system is graduated. If 40% don’t make enough to hit a band where income is taxed, then you can assume it’s a gentle ride from paying no taxes to not paying much taxes. And anyways, payroll taxes are by far the higher burden for service workers than income taxes.
Well, to be fair, the IRS considers the average tip to be 8% for taxation purposes.
The whole "I get taxed whether you tip me or not", "I have to pay to serve you if you don't tip"? No, not so much. If you can show (there's even a hugely burdensome IRS form that might take as much as 3-4 minutes a month for cash tips) that you earned less than that 8% average, then that's what you get taxed. But most servers don't want to fill that form out, because they get ... rather more than that, and are being undertaxed already.
Sure, but TFA makes clear that any benefit to workers from tax-free tips is laughable compared to the numbers of times the restaurant lobby has fucked them over, by repeatedly killing attempts to keep wages low. It's not even throwing workers scraps, it's more like throwing them crumbs.
Beware the logical fallacy. "A implies B" does not mean that "not A implies not B".
Workers who earn too little to pay taxes (A) will not benefit from a tax cut (B).
But workers who earn enough (not A) may still not benefit (not B), for example because their employer indirectly pockets the difference. That is actually being argued in the article.
So this is indeed the appropriate way of formulating the statement: at least 40% of workers will demonstrably not benefit from this.
Pretty sure they are aware, they included the qualifier "a sizeable majority" instead of implying it applied to all.
I can't read this article because of the paywall. Are they saying that taxable tips are subject to payroll taxes (which employers pay out of pocket)? That would actually benefit both employers and employees in some sense.
Some tipped workers, like bartenders, can make more in tips than a junior software engineer lol. Less taxes definitely helps their cause.
If you are concerned with indirect effects, there's quite a few pros and cons that you could extrapolate from the no tax on tips policy. These arguments are far less compelling in general.
https://archive.is/20250731232051/https://www.newyorker.com/...
> Some tipped workers, like bartenders, can make more in tips than a junior software engineer lol. Less taxes definitely helps their cause.
neat, but you can only deduct up to $25k and the benefits phase out if you earn more than $150k (single filers).
I think most bartenders would appreciate an extra $25k.
I am sure they would! but that isn't what the law says. Its a $25k DEDUCTION.
If someone earned $125k salary + $25k in tips. Their taxable income would decrease by about $6k (or $500/mo, 4% overall).
Okay. I think they would also like an extra $6k.
Deducting 25k does not mean taking home an extra 25k. It means, probably, somewhere around $1-3k, depending on their tax bracket.
That's...not how it works, like, at all. It's a tax credit, not actual money that you pocket additionally from your existing paycheck. It also only lasts until 2028.
> I can't read this article because of the paywall
I just turned on reader mode in Firefox and then refreshed the page and got the article. I'm surprised how often it works. It often doesn't but sometimes it does.
But it would be true to say not B implies not A right? (contrapositive?)
In that case B would be "is not taxed on the income" and A is "part of the 40%" making the statement not B implies no A: "If you are taxed on your tips that implies you are not part of the 40%".
That seems correct. It's a pretty useless statement, but it is true.
it's indirect tax credits for businesses that don't want to pay workers.
No, it isn't. It doesn't affect the wage they have to pay them. It just affects whether the employees need to pay taxes on tips.
It may not affect the wages they have to pay but may affect wages they pay if they pay above the minimum.
it will absolutely affect the wage they are paid, it will be used as a constant excuse to not pay more than the legal minimum (2.13/hr as long as tips are greater than $7.25/hr)... probably used to justify additional tip stealing that happens pretty much everywhere, people will tip less because of it
servers are treated like absolute garbage
Good servers are treated well and make good money.
This is nonsense for most jobs, and it's nonsense here too. Very rarely are any jobs treated on pure merit of good vs bad performance. Ultimately it ends up being mostly the luck of having reasonable management and good opportunities. Reasonable management is very hard to come by in the restaurant industry.
And either way, if you wanted to believe the merit-based approach, you're talking maybe the top 5% of servers anywhere making "good" money. Wage theft in the industry is colossal.
I will be pleasantly surprised if the removal of tax on tips does absolutely anything to move the needle for the bottom 95% of servers.
The restaurant industry has been lobbying for this to further avoid the pressure of raising wages and the complication of reporting taxes — the reasoning is out there in the open.
This is the sort of modern shell game where corporate interests further obscure costs to trick the lower class into thinking it's a good deal. It's akin to the math on maintenance Uber drivers tend to fail to do when they're calculating their wages... they're absolutely getting hosed and most of them don't even understand how.
You can just look this up, it's not a secret. Median total pay, including tips, in the US is $32k for waiters. In France, it's €22k. The UK is £23k. Even factoring in health insurance costs — ~4.5k/year for an Obamacare plan — waiters make more in America.
Waiters in the US make significantly more than their British and French counterparts, due to tipping: the US minimum wage is lower than the British and French minimum wages, and despite American waiters being paid at an even lower hourly rate than the US minimum wage, they end up making more due to tips, performing the same job.
The upper 25% of waiters in the US make over $40k a year. Your 95% estimate is very off base.
$32k = 27.5k€, and if we include the insurance numbers you provided: $27.5k = 23.5k€
> waiters make more in America
By apparently 1.5k€ per year? Not a strong argument as it stands and we haven't even begun talking about the lifestyle and workplace differences between the two countries.
Waiters in the U.S. make more, due to tips, despite the U.S. having a lower minimum wage. Do you think American waiters want to make $2k/year less? That's nearly 10% of their income.
And that's before even factoring in the tax benefits, which is exactly what this article is about! No tax on tips means nearly all of that income is untaxed. French waiters pay 11% taxes, and British ones are in a 20% tax bracket. The difference widens even further.
Tips allow American waiters to earn more, and no tax on tips makes them take home even more. Hand-wringing about how the American system pays less than the European one is innumerate.
yeah just ignore cost of living differences and rampant wage theft I guess
There is no useful point to saying what you just said.
You can make that argument about literally anything that reduces the tax burden on people who's primary income is useful income.
Correction: primary income is earned income
The tax system is graduated. If 40% don’t make enough to hit a band where income is taxed, then you can assume it’s a gentle ride from paying no taxes to not paying much taxes. And anyways, payroll taxes are by far the higher burden for service workers than income taxes.
Well, to be fair, the IRS considers the average tip to be 8% for taxation purposes.
The whole "I get taxed whether you tip me or not", "I have to pay to serve you if you don't tip"? No, not so much. If you can show (there's even a hugely burdensome IRS form that might take as much as 3-4 minutes a month for cash tips) that you earned less than that 8% average, then that's what you get taxed. But most servers don't want to fill that form out, because they get ... rather more than that, and are being undertaxed already.
Sure, but TFA makes clear that any benefit to workers from tax-free tips is laughable compared to the numbers of times the restaurant lobby has fucked them over, by repeatedly killing attempts to keep wages low. It's not even throwing workers scraps, it's more like throwing them crumbs.
and it’s a not even a forever thing like the rich guys got. this thing sunsets.