No Taxes on Tips
As you may well know, the poorest segments of our society have traditionally worked at jobs that are dependent on tips. In the past most of the tips were in cash, and though subject to taxes, this money usually slipped through the cracks as far as enforcement. In several cases these individuals are exempt from minimum wage laws and work for an even lower hourly salary! The onus was on the individual through the honor system to pay their taxes on these tips when they filed quarterly or yearly. Currently, the hospitality industry has exploded, putting it in the cross hairs of the IRS.
In our age, this revenue hungry government has realized that they do miss out on monies from tips which they must do everything possible to guarantee that taxes get paid on. This has led the IRS to heavily audit not just the individuals, but the establishments that they work at or pressure them to come up with policies and procedures that in the end help the government and sometimes the owner (you will see) at the expense of the poor worker. Many of the new policies and procedures to handle cash tips involve communal sharing of tips which hurt morale and takes away the incentive to give outstanding service since your hard earned tips will now be shared with others who might not care as much about providing quality service. In some cases, the government will set a minimum that they “believe” you will get in tips and tax you based on that. Incredible, bad enough you are having trouble making ends meet, but now you have to pay taxes on money you do not have!
In the electronic age, there is a lot of tip money which is recorded on check slips through the use of debit and credit cards which provide a paper trail. However, these also get added to the communal “pot” which are recorded, averaged out and then paid out, as the owner sees fit. Well, in many cases, the owners have come up with all kinds of reasons to take out their cut of the tip. Some have gotten away with it, saying that they are charging the workers for them having to do this paperwork for them. Others, in addition, skim some cash from the top of the pot and simply pocket it for themselves. Who will know?
Common sense tells us that many of these poor workers will get frustrated and leave. In more than 75% of the cases these individuals have little or no marketable skills, and are forced to turn to the government for assistance when they are out of work. The tip policies take away the incentive to work hard since they see that they will not get properly rewarded, and seeing the greedy owners and supervisors taking their unfair cut of the tip monies is the finishing blow to break their spirits.
Therefore, I propose that we start with these individuals in the service industry and free them from the double tyranny of their bosses and IRS who take their hard earned tips away. I will support a measure to eliminate these erroneous policies and make their tip money tax-free. I am willing to work with all of the unions, guilds and trade associations to make it a reality for the poor service industry workers who need this help the most.