On the final leg of his campaign trail for this week’s Democratic National Convention, former President Donald Trump stopped at a Mexican restaurant in Las Vegas to talk about the tax-free tip policy he introduced in June.
“If you work in a restaurant, as a bartender, in catering, as a caddy, barber, driver or anywhere else, you depend on high tips,” he said, adding, “If you are re-elected in November, we will allow you to keep 100 percent of your tips without being harassed for it.”
Trump said that about 5.5 million workers in the United States rely on tips for their livelihoods. Among them are 700,000 single mothers nationwide who rely on tips to support their children.
Las Vegas is home to one of the largest concentrations of people working in the service sector.
The federal minimum wage for tipped workers is $2.13 an hour, a rate that has not changed in decades.
Tips are treated as taxable income by the Internal Revenue Service. About half of waiters and waitresses in the U.S. earn less than $32,000 annually in wages and tips, according to the Bureau of Labor Statistics.
Trump said, “In our case, we really mean it,” when he promised not to tax tips. “We’re going to do that very quickly, by the way.”
“Kamala Harris is now pretending to support my policies,” he said of the current vice president and newly elected Democratic presidential candidate. “She’s just a copycat. She’s a turncoat. She went from communism to capitalism in about two weeks.”
Harris’s policy differs from Trump’s, however. When asked by reporters, Trump said his plan to not tax tips would be “fully implemented” — exempting tips from both income and payroll taxes. The Harris team has said it will ensure that tips are subject to payroll taxes, not income taxes. Payroll taxes fund programs like Social Security and Medicare.
The former president chided Harris for her use of the tie-breaking vote to hire 87,000 new IRS agents “to control your tip income,” he said. “They go after it in a lot of ways.”
In 2021, the Biden administration approved hiring 87,000 new tax agency employees by 2031, only a small percentage of whom will be agents. The majority of the hires are expected to be to fill vacancies, as more than half of the agency’s employees are eligible to retire by 2026.
The IRS currently has a staff of approximately 79,000 employees, of which 8,000 are agents who review tax returns and 2,000 investigate possible tax offenses.
In a brief speech, Trump repeated many of the points he made at other campaign events earlier in the week as part of his counter-programs. He blamed Harris for inflation and high energy prices and promised that if he were re-elected, he would cut taxes, reduce regulations and make America affordable again.
