PORTLAND, Maine (WMTW) – Both Vice President Kamala Harris and former President Donald Trump have called for an end to the tip tax. What could that mean for Maine residents?
“Our salary is basically just enough to cover those taxes,” said Daija Ramos, a waitress in Portland.
Ramos says she relies on tips, so her pay can fluctuate. She believes eliminating the tip tax could help.
“We don’t have a set salary. We never know what to really expect when it comes to our paychecks,” she said. “So I think either raising the minimum wage or lowering taxes on tips would help.”
Hospitality Maine, an organization that advocates for the interests of hospitality workers, supports efforts to support workers in the service sector.
“We welcome that the idea of eliminating taxes on tips continues to keep restaurants and tipped servers in the conversation in Congress and around the election,” said Nate Cloutier, director of government affairs at Hospitality Maine, in a statement. “These employees are vital to the hospitality that drives restaurants in every community. Tax policy plays an important role in the success of the restaurant industry, so we will continue to work with Congress on this and other common-sense tax proposals that will support the vitality of restaurants in every Maine community.”
However, economic analysts are skeptical about what impact this policy might have.
“Some of the lowest-income people would not benefit from such a policy,” said James Myall, economic policy analyst at the Maine Center for Economic Policy. “They already don’t have to pay federal income tax because their income is too low or they receive other tax credits like a child tax credit that offsets some of that income.”
According to Myall, about 2% of workers in Maine are tipped employees. Nationwide, about a third of tipped workers pay no income tax, according to a Yale University report.
He believes that raising the minimum wage for tipped workers might make more sense.
“I think that particularly for tipped workers, the best way to help them is to increase the base wage they get before tips are added in,” Myall said.
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