Harris, Trump propose ending federal tax on tips; Triad expert weighs in

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GREENSBORO, N.C. (WGHP) — Working as a waitress is no easy job, but Olivia Parrish who works at Dame’s Chicken and Waffles in Greensboro does it flawlessly while relying on tips to make a living.

“We have some days that are really busy and some days that are slow … Unfortunately, a lot of people don’t even tip 20 percent, so it makes it hard,” Parrish said.

As a single mother who’s paying off her college tuition, Parrish says taxes on tips also hurt her wallet.

“As a server, I get a really low hourly wage, so for them to not tax my tips would mean I could take home a lot more money, and I’m not worrying about not giving half of my money to the government,” Parrish said.

Currently, the federal minimum wage is $7.25, and the minimum wage for tipped employees is $2.13​.

According to the U.S. Bureau of Labor Statistics, 2.24 million Americans are waiters or waitresses.​

In a rare political overlap from both sides of the aisle, Former President Donald Trump announced a proposal to exclude tips from federal taxes, and Vice President Kamala Harris announced a similar proposal.

While workers like Parrish welcome the idea, High Point University Economics Professor Peter Summers says making that a reality is not as easy as these presidential candidates make it seem.

“Ultimately, it would … depend on who controls Congress and how popular it is there,” Summers said. “I think the idea itself is not a very good one.”

Summers says it’s unlikely because bills to eliminate tax on worker tips have stalled out in Congress before.

He says the U.S. government could lose anywhere between $100 billion and $200 billion annually over the next decade if this proposal happens.

That also depends on whether the exemption is just for federal income tax or if it’s just exempt from payroll taxes.

Neither candidate has said whether they would exempt tips from income or payroll taxes or both yet.

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