# How do you effectively eliminate taxing tips? **URL:** \ **Category:** Great Debates\ **Created:** [August 12, 2024, 12:15am UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585 "2024-08-12T00:15:31Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Omar\_Little](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/omar_little/32/269_2.png) [@Omar\_Little](https://boards.straightdope.com/u/Omar_Little)\ **Post date:** [August 14, 2024, 9:08pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/41 "2024-08-14T21:08:27Z")
> [@Whack-a-Mole](#): > > Not sure how that works with the IRS. Sameway as babysitters…it’s self reported. ---
**Author:** ![Dinsdale](https://avatars.discourse-cdn.com/v4/letter/d/97f17d/32.png) [@Dinsdale](https://boards.straightdope.com/u/Dinsdale)\ **Post date:** [August 15, 2024, 6:18pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/42 "2024-08-15T18:18:47Z")
> **[Zorn: Conventional wisdom](https://ericzorn.substack.com/p/zorn-conventional-wisdom)** > > Thoughts on the upcoming gathering in our fair city Read this comment today. Cites several other reports suggesting -37% of “tipped” workers earn little enough that they pay no federal income tax (cited above) -would be complicated for the federal gov’t to enact -higher income jobs could outsource “bonuses” as “tips” -tips are income, which should be taxed the same as so much other “non-traditional income” which is subject to tax ---
**Author:** ![Odesio](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/odesio/32/20003_2.png) [@Odesio](https://boards.straightdope.com/u/Odesio)\ **Post date:** [August 16, 2024, 1:55am UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/43 "2024-08-16T01:55:37Z")
> [@Dr.Drake](#): > > Legally, it’s allowed, but could you return to that restaurant and be welcomed if you didn’t tip? A few years back I remember a news story about a restaurant where the staff refused to serve two women, regular customers, who were known for not tipping. I tried looking the story up, but apparently this is such a common occurence that I could’t find the specific story I was looking for. In the story I remembered, the women frequently dined there, but staff were tired of getting stiffed and one day nobody would servce them. I remember one of the women complaining on television that tips were optional, but I couldn’t help but think how embarrassing it would be to appear on television because I didn’t tip. Generally speaking, restaurants have the right to refuse service so long as its not for any discriminatory reasons. But if a restaurant has the right to refuse service because you don’t tip, is it really optional? ---
**Author:** ![Max\_S](https://avatars.discourse-cdn.com/v4/letter/m/46a35a/32.png) [@Max\_S](https://boards.straightdope.com/u/Max_S)\ **Post date:** [August 16, 2024, 4:59am UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/44 "2024-08-16T04:59:24Z")
> [@Odesio](#): > > But if a restaurant has the right to refuse service because you don’t tip, is it really optional? Yes, tipping is optional unless the restaurant actually requires the tip for service. Such as the common case of automatic gratuity for large parties. In which case it is no longer considered a tip for tax purposes. ~Max ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [August 16, 2024, 6:13am UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/45 "2024-08-16T06:13:03Z")
> [@Odesio](#): > > But if a restaurant has the right to refuse service because you don’t tip, is it really optional? Sure, becuase that so rarely happens. And if you had a good reason or even maybe you _thought_ you had a good reason, no will will refuse to serve you. But if you are a jerk over and over and over- yep, they can refuse to serve you. ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [August 16, 2024, 2:31pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/46 "2024-08-16T14:31:22Z")
> [@Baker](#): > > I have quietly asked sone servers if they prefer cash or a tip on the card. If I’m in a place that doesn’t have an automatic gratuity they almost always prefer cash. But I would guess this is not for tax reasons; it’s because in case of credit card payments, the employer will deduct the credit card fee before disbursing the tip to the waiter. ---
**Author:** ![Dr.Drake](https://avatars.discourse-cdn.com/v4/letter/d/ad7895/32.png) [@Dr.Drake](https://boards.straightdope.com/u/Dr.Drake)\ **Post date:** [August 16, 2024, 3:09pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/47 "2024-08-16T15:09:20Z")
That’s part of the problem with this system. It’s technically optional but practically mandatory. Once in a while, a patron skipping a tip is written off, but tipping is far from completely voluntary. I hate tipping. I always tip. ---
**Author:** ![Gozu](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gozu/32/6615_2.png) [@Gozu](https://boards.straightdope.com/u/Gozu)\ **Post date:** [August 16, 2024, 3:42pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/48 "2024-08-16T15:42:49Z")
The Walmart cashier deserves a tax break as much as the massage therapist. That is to say it’s a regressive tax policy that does not spread the tax burden equitably, but is an unfair giveaway to tip workers on the back of non-tip workers. It will no doubt create some loopholes bad actors will exploit for tax evasion purposes. I rather prefer drastically increasing the federal minimum wage. ---
**Author:** ![Baker](https://avatars.discourse-cdn.com/v4/letter/b/bb73d2/32.png) [@Baker](https://boards.straightdope.com/u/Baker)\ **Post date:** [August 16, 2024, 6:43pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/49 "2024-08-16T18:43:21Z")
Either reason, it’s sucky of an employer to make the server pay for the choice I made in payment method. ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [August 16, 2024, 7:24pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/50 "2024-08-16T19:24:08Z")
That’s one way to look at it. Another way would be to say that the tip goes to the waiter, not the employer, so why should the employer pay the credit card fees on that part of a transaction? If we assume an average tip of 15% and an average credit card fee of 3%, then an employer who agrees to cover those fee will spend 0.45% of total sales (not just profit) just on credit card fees for staff tips. That adds up quickly. At the end of the day, the credit card fee is an expense that someone has to pay for. ---
**Author:** ![Baker](https://avatars.discourse-cdn.com/v4/letter/b/bb73d2/32.png) [@Baker](https://boards.straightdope.com/u/Baker)\ **Post date:** [August 16, 2024, 10:59pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/51 "2024-08-16T22:59:32Z")
> [@Schnitte](#): > > At the end of the day, the credit card fee is an expense that someone has to pay for. To me it’s for the employer to pay, and then me. Not the server. ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [August 17, 2024, 8:46am UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/52 "2024-08-17T08:46:37Z")
> [@Baker](#): > > To me it’s for the employer to pay, and then me. Not the server. You always have the option of tipping in cash. And if you think (as you say) that the server’s interest (receiving the tip in full without deductions) takes priority over yours (using cards as your preferred means of payment), then that’d be an obvious solution to the problem. Alternatively, you can continue to tip by card but add the credit card fee to the amount of your tip so that what remains after the fee is the amount you want the server to get. That would also be in line with your principle that it’s rather for you to pay than for the server. ---
**Author:** ![Dr.Drake](https://avatars.discourse-cdn.com/v4/letter/d/ad7895/32.png) [@Dr.Drake](https://boards.straightdope.com/u/Dr.Drake)\ **Post date:** [August 17, 2024, 12:25pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/53 "2024-08-17T12:25:37Z")
Don’t we kind of do this already? We used to tip 15%. Now it’s 20%. Surely that covers the credit card fees. ---
**Author:** ![Max\_S](https://avatars.discourse-cdn.com/v4/letter/m/46a35a/32.png) [@Max\_S](https://boards.straightdope.com/u/Max_S)\ **Post date:** [August 17, 2024, 1:32pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/54 "2024-08-17T13:32:32Z")
In my state, we don’t have credit card fees. We have cash discounts. Like, there is a law that bans credit card fees in retail. ~Max ---
**Author:** ![Dr\_Paprika](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr_paprika/32/3042_2.png) [@Dr\_Paprika](https://boards.straightdope.com/u/Dr_Paprika)\ **Post date:** [August 17, 2024, 1:40pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/55 "2024-08-17T13:40:34Z")
The point of the policy is not to be effective. The point is to be politically attractive, to make it seem like parties care about the little people and deserve their vote. Which is why Trump announced his policy in Nevada. Maybe it works, so Harris borrowed the same idea. Similarly, Harris talks about price gouging which is a complex economic issue. Of course it occurs. Of course it is disliked. But price controls are a very clumsy way to try to constrain supply and demand as many dictators have discovered. There is room for negotiation with regard to popular medicines and essential foods, already heavily subsidized in some cases. But while political popular, actual legislation is hard to pass and actual improvements are hard to garner. As for tips, maybe electronic payments mean more of them are recorded. Statistically, a certain percentage of people would not report their tips. If the government really wants to maximize revenues it should be concentrating on people with very high incomes who have real money in the first place, not the servers. ---
**Author:** ![Max\_S](https://avatars.discourse-cdn.com/v4/letter/m/46a35a/32.png) [@Max\_S](https://boards.straightdope.com/u/Max_S)\ **Post date:** [August 17, 2024, 1:46pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/56 "2024-08-17T13:46:17Z")
What I want someone to tell me, without me having to research it myself, is whether a President can implement the policy without an act of Congress. Executive orders to the IRS and such. Because if no, I think it’s just not happening. And then of course those poor states with income taxes, what can the President do about that? ~Max ---
**Author:** ![OldGuy](https://avatars.discourse-cdn.com/v4/letter/o/3bc359/32.png) [@OldGuy](https://boards.straightdope.com/u/OldGuy)\ **Post date:** [August 17, 2024, 1:53pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/57 "2024-08-17T13:53:27Z")
> [@Max\_S](#): > > n my state, we don’t have credit card fees. We have cash discounts. > > Like, there is a law that bans credit card fees in retail. > > ~Max You’re thinking of a discount to the patron instead of an add-on to the patron when they choose a credit (or debit) card. These are (or at least were) against the contract between the credit card company and the seller. The discussion is about the percentage fee that the credit card issuer charges the seller. ---
**Author:** ![Max\_S](https://avatars.discourse-cdn.com/v4/letter/m/46a35a/32.png) [@Max\_S](https://boards.straightdope.com/u/Max_S)\ **Post date:** [August 17, 2024, 4:02pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/58 "2024-08-17T16:02:10Z")
Oh, my mistake. In that case, the credit card fee charged by processors, of course, includes the tip. And federal law does not prohibit the employer from subtracting the respective proportion of the fee from the tip. > **Department of Labor cite** > > [https://www.dol.gov/agencies/whd/fact-sheets/15-tipped-employees-flsa](https://www.dol.gov/agencies/whd/fact-sheets/15-tipped-employees-flsa) > > > **Credit Cards:** Under the FLSA, when tips are charged on customers’ credit cards and the employer can show that it pays the credit card company a percentage on such sales as a fee for payment using a credit card, the employer may pay the employee the tip, less that percentage. For example, where a credit card company charges an employer 3 percent on all sales charged to its credit service, the employer may pay the tipped employee 97 percent of the tips without violating the FLSA. > > > > However, the employer cannot reduce the amount of tips paid to the employee by any amount greater than the transactional fee charged by the credit card company, regardless of whether or not it takes a tip credit. Doing so would be a keeping violation under section 3(m)(2)(B). Additionally, this transactional fee may not reduce the employee’s wage below the required [minimum wage](https://www.dol.gov/agencies/whd/minimum-wage), including the amount of any tip credit claimed. Under federal law, the amount due the employee must be paid no later than the regular pay day and may not be held while the employer is awaiting reimbursement from the credit card company. Note: Some states may have more protective laws regarding tips charged to credit cards which do not allow the employer to deduct credit card fees from employees’ tips. ~Max ---
**Author:** ![CaptainE](https://avatars.discourse-cdn.com/v4/letter/c/71c47a/32.png) [@CaptainE](https://boards.straightdope.com/u/CaptainE)\ **Post date:** [August 17, 2024, 4:02pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/59 "2024-08-17T16:02:16Z")
Campaign promises are for the feeble minded voters primarily. Remember when the clown proposed taxpayers would be able to file on a postcard? Are we doing that now in the US? Nope. > **[Republicans promised Americans could file taxes on a 'postcard' — but that...](https://www.businessinsider.com/the-republican-tax-reform-postcard-dead-year-2019-7)** > > The Republican tax postcard — a selling point for the 2017 tax reforms — is dead after a year, and a tax expert believes its demise was "inevitable." ---
**Author:** ![Max\_S](https://avatars.discourse-cdn.com/v4/letter/m/46a35a/32.png) [@Max\_S](https://boards.straightdope.com/u/Max_S)\ **Post date:** [August 17, 2024, 4:05pm UTC](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585/60 "2024-08-17T16:05:30Z")
I personally filed on those things a couple years, the paper 1040s, and found them easy to use. ~Max [Previous page](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585.md?page=2) [Next page](https://boards.straightdope.com/t/how-do-you-effectively-eliminate-taxing-tips/1005585.md?page=4)