Really they’re pretty much just recognizing the reality of most small shops that I’ve ever known. At least when tipped in cash I’ve never known one to care to register and tax tips. Maybe that’s changed with people shifting so much to cards and apps now, and some big places, by third hand accounts, are more twitchy about ‘those are the rules’.
Yeah, but if that’s the reasoning, this bill does nothing. A tax deduction just reduces your taxable income. So you can volunteer to report your cash tips in order to not pay taxes on them. Or continue to not report and also not pay taxes. Or just report $25k. They all lead to the same tax burden.
It’s for show, ‘he helps the little people!’ while the actual deductions are all funneled to the top.
I’m shocked that the bill as voted (link) is not loaded with pork.
It does limit the “tax free” portion to a $25k deduction, though. I know servers who make 50k a year. So they’ll still be taxed or under report.
I’m noticing a weird tax cliff. Someone earning $149,999 (approximately; I didn’t look up the exact amount) qualifies, and someone earning $150,001 is excluded entirely. So that mythical thing where earning more money can be worse for you, that is almost never a real thing… it’s actually a thing here.
That’s kinda fucky, but idk how many people that could actually impact.
The especially dumb thing is this is for cash tips reported for taxation, so they can just underreport if/when they expect the limits to be an issue.
Plus the tax deduction cap is a hard value without any callout to the treasury department to modify the cap as inflation grows. So if we hit a hyperinflation scenario, a $25k cap won’t mean shit. Congrats on getting a free hotdog’s worth of tax writeoffs.
So the earning limit is indexed but the amount you can claim is not. Somehow half idiocy is much worse than full idiocy.
Placate the stupid, greedy masses and setup an easy, tax free way to pay sex workers and launder money.
If Ted Cruz is praising it, I don’t know…
