\n Posted on: August 18, 2024, 08:59h.\u00a0\n <\/p>\n
\n Last updated on: August 18, 2024, 08:59h.\n <\/p>\n
![\"Avatar](\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/03\/cropped-4-1-50x50.png\")
<\/div>\n<\/p><\/div>\n<\/p><\/div>\nDonald Trump and Kamala Harris each pledged while stumping in Las Vegas to eliminate taxes on service workers\u2019 tips.<\/span><\/p>\n The tax-free tip commitments resonated in Nevada, the state home to the highest concentration of tipped workers in the country. But a prominent law and economics professor is casting doubt on either president\u2019s ability to champion such a tax code change, a power that ultimately rests with Congress.<\/span><\/p>\n Speaking recently with the Associated Press<\/i>, James Hines Jr., a law and economics professor at the University of Michigan and the research director of the Ross School of Business Office of Tax Policy Research, says amending how service workers are taxed would be complicated for the IRS<\/a> and cost the federal government hundreds of billions of dollars.<\/span><\/p>\n<\/div>\n \u201cThere\u2019s no way that it wouldn\u2019t be a mess,\u201d said Hines Jr.<\/span><\/p>\n Michigan\u2019s law and economics schools are consistently ranked among the nation\u2019s 15 best by U.S. News & World Report.<\/i><\/span>\u00a0<\/span><\/p>\n Hines believes such a change would result in many workers attempting to reclassify their income as tipped wages.<\/span><\/p>\n For example, a contractor might take a $2,000 service bill and amend it to a $1,000 job with a $1,000 mandatory gratuity. Employers might also reclassify annual bonuses as tips to lessen their payroll taxes and allow workers to keep more of their pay.<\/span><\/p>\n You will have taxpayers pushing their attorneys to try to characterize their wage and salary income as tips,\u201d Hines said. \u201cAnd some would be successful, inevitably, because it\u2019s impossible to write foolproof rules that will cover every situation.\u201d<\/span><\/p>\n<\/blockquote>\n Fiscal estimates project that removing the IRS\u2019 tip tax could cost the federal government as much as $25 billion a year. Hines thinks the change would end up benefiting the wealthy and high-income earners, not the low-income taxpayers Harris and Trump are seeking to help.<\/span><\/p>\n \u201cIf the issue is you\u2019re concerned about low-income taxpayers, there are a lot better ways to address that problem,\u201d Hines said, suggesting better avenues to be increasing the Earned Income Tax Credit or lowering tax rates.<\/span><\/p>\n This is good politics but bad policy,\u201d added Erica York, a senior economist and research director at the Tax Foundation, a think tank headquartered in Washington, D.C.<\/span><\/p>\n<\/blockquote>\n There are about four million workers in the U.S. who work in a tipped occupation, or about 2.5% of the country\u2019s labor force.<\/span><\/p>\n While both the Republican and Democratic presidential candidates agreed that tipped workers shouldn\u2019t have to pay taxes on gratuities<\/a>, the leading casino union in Las Vegas is only supporting Harris for Nov. 5. Culinary Union<\/a> Secretary-Treasurer Ted Pappageorge expressed differing opinions on the candidates\u2019 tip tax guarantees.<\/span><\/p>\n When Trump first pledged to remove taxes on tips in June, Pappageorge said, \u201cRelief is definitely needed for tip earners, but Nevada workers are smart enough to know the difference between real solutions and wild campaign promised from a convicted felon.\u201d<\/span><\/p>\n But after Harris this month made a similar pledge<\/a>, Pappageorge responded that the vice president \u201cacknowledged the hard-working men and women of the hospitality industry.\u201d<\/span><\/p>\n<\/div>\n On the political betting exchange Polymarket, Harris and Trump are in a dead heat<\/a> at the time of this writing.<\/span><\/p>\n<\/div>\n![\"Trump](\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2024\/08\/cbsn-fusion-what-harris-trump-propose-on-taxes-trade-and-economic-policies-thumbnail-1-858x483.jpg\")
Tip of the Iceberg<\/b><\/span><\/h2>\n
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Union Embraces Harris Pledge<\/b><\/span><\/h2>\n