Although it may seem difficult, there are similarities between Kamala Harris and Donald Trump. The Democratic presidential candidate announced on Saturday that if she were to win the White House, she would eliminate tip taxes. The initiative was widely applauded in Las Vegas, which has a robust hospitality industry with some 300,000 workers. But there is a problem. Trump launched the same proposal, in the same city, two months earlier, after a waitress complained that the government keeps a large part of her salary. “This is TRUMP’s idea. She (Harris) has no ideas, she just steals them from me,” the furious Republican candidate wrote on Truth Social.
The MAGA movement has been targeting Harris since Sunday, calling her a plagiarist for taking up one of Trump’s less radical proposals. “The difference is that she won’t implement it, she just wants to use it for political purposes,” said the Republican, who is competing head-to-head with Harris to win Nevada in November. According to 538, the ABC polling project, the Democratic candidate is ahead of the former president by a marginal 0.6%.
The Culinary 226 union, which represents about 60,000 hospitality workers in Nevada, has celebrated making their own taxes exempt and raising the minimum wage, other initiatives announced by Harris. The organization endorsed the Democratic candidate before her visit to Las Vegas. However, it remained silent on Trump’s original proposal. A spokesperson for Harris’ campaign assured NPR on Tuesday that the proposals are different, but that the details will be announced soon.
Democratic Congressman Steven Horsford has called the bluff from the conservative politician. “If Trump really wants to help tip earners, he would be proposing to eliminate the subminimum wage,” the lawmaker said before Harris echoed the issue of tips. Horsford was referring to the federal minimum wage for service workers, which has remained at $2.13 an hour since 1990. Meanwhile, the federal minimum for other jobs is $7.25 an hour. Seven states, including Nevada, have passed laws banning paying the first amount.
The tax break has been attractive to Nevada, where many hotel and casino employees earn, on average, $4 less per hour than in other states. The proposal, however, would benefit all hotel and casino workers in the country. There are about 2.3 million people, according to the latest available statistics from the Department of Labor, from May of last year. The average annual income for these workers is $36,500.
Nevada’s two senators, Catherine Cortez Masto and Jacky Rosen, who is seeking re-election in November, are also in favor of the measure. Both have signed on to a bill introduced in July by Sen. Ted Cruz, a radical Republican from Texas. This shows that, at least before the election, the two major parties have shown agreement and willingness to push the proposal forward.
Skeptic economists
Although it has electoral traction, economists have been less than enthusiastic about the promise. Experts believe the plan would not deliver the benefits that sound so good at political rallies. First, it would not change the reality for most low-income workers. Less than 3 out of every 100 employees in the country depend on tips to supplement their salaries, according to Yale University. The core of this workforce is teenagers and people under 25 years old.
“How are you going to determine who is receiving a tip and when that tip exceeds the wage limit?” said Steve Rosenthal of the Urban-Brookings tax think tank. He told public radio that the measure could disproportionately benefit servers who earn a low minimum wage but receive a lot of tips. In contrast, in states like California, where wages are higher and tips lower, it would barely make a dent in the pocketbook.
If approved by Congress, the initiative could leave tax authorities with a $150 billion to $250 billion gap over the next decade, according to the nonprofit Committee for a Responsible Federal Budget. If the policy is accompanied by a minimum wage hike, the U.S. deficit could balloon by another $200 billion between 2026 and 2035. according to the group.
There are also fears that this will distort the labor market. “In practice, the tax exemption could lead employers to recharacterize ordinary income as tips, which could result in lower wages and higher tips. The magnitude of that effect is uncertain and would depend significantly on the regulations that accompany the rule,” they added. Harris’ campaign, without going into specifics, assured that its proposal would be accompanied by requirements to prevent companies from taking advantage of this.
Kid Rock, the white rapper who performed at the Republican National Convention that anointed Trump, has been spreading the word about the initiative. Last month, the musician posted a photo of himself leaving a $400 tip on a $1,143 bill at a Kentucky steakhouse. “A vote for Trump is a vote to end tip taxes,” he wrote on the account.
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