In search of articles definitively establishing that waitstaff income is much less in the U.S. in comparison to the rest of the world (the evidence is spotty, to say the least), I found one describing how anti-tip mentality, particularly among younger diners is affecting the income of French waitstaff. As of 2014, the percentage of diners not leaving any tip had risen from 7 to 15%.
The same article, in describing the legendary rudeness of French waiters, quoted one as justifying it on the grounds that French diners are also incomparably rude.
I’d be at least a bit surprised if it was that high, both because a fair amount of tips are now on credit cards, which leaves a paper trail, but even without that… The IRS knows how much business (gross revenue) the restaurant is doing, and they probably have a sense of what an average tip in that kind of establishment looks like. If overall tips reported as income were 5% lower, they might not notice. But 84%? C’mon.
I really doubt anyone at the IRS is scouring waitstaff returns to see how much in tips they’re reporting and cross checking with data they have from the employer’s business. If some college student is reporting $10,000 in wages and $6,000 in tips, no one is going to look and see if they can establish that they really made $20,000 in tips.
The IRS has a bad reputation for scrutinizing the returns of low-income folks more closely than those of high-income folks. A lot of this is around EITC fraud or misuse, but I wouldn’t be surprised if misreporting tips was part of it, too.
It’s not very cost effective to spend your resources finding tax fraud among people who don’t have assets you can take.
It happens, usually because they are being very flash with their cash, driving a flash car, a big boat, etc. But it’s rare.
Secondly, it is a HUGE amount of work to scour daily receipts tracking tips for one server in a busy establishment, you’re going to have to find huge income for the manpower cost of the inquiry to balance out.
[Where I am, it’s not wise to seriously and consistently under report your tips as your elder benefits are tied to declared income. So, if you want your pension to be enough to live on, you need to report. Same for Employment Insurance benefits, what you get back can be based on your declared income. Those holding the job over a couple of years won’t much matter, but if you’re in it long term, you need to consider it!]
I think you’re mis-stating the cost benefit analysis here. First, it’s probably not very hard to identify high-likelihood targets in an automated fashion with software: the IRS has statistical models that they use to estimate how much money someone reporting their job as waiter/waitress should be reporting: Does the IRS Go After Waitresses for Their Cash Tips? | Pocketsense. Second, they don’t need to necessarily recover 100% of what it costs them to investigate a particular case. A lot of the benefit to the IRS is to create an incentive for others to honestly report their tips.
I couldn’t find any quantification of how common this is with a couple minutes of googling, but it’s fairly clear these audits do happen. I did run into the 84% several times, though, so that’s pretty thoroughly out there, even if poorly sourced.
This just cracked me up, because it immediately caused a long ago memory to jump into my consciousness. We had a group lunch at a Japanese restaurant (in CA if it matters), and I’d inadvertantly forgot to sign my credit card slip (back when that was necessary). A woman in full kimono and geta came running after me in the parking lot to get me to sign.
I saw this recently as well. The leading hypothesis as to why they target people with less money is that they don’t have any money to hire fancy lawyers and accountants to obfuscate things or have offshore bank accounts and investment income beyond the reach of US authorities. It will be obvious once anyone checks that they defrauded the IRS, the IRS can easily calculate how much they owe, the targets will have absolutely no defense, and the IRS can seize whatever money is still left in their bank account and then garnish their wages for as long as it takes.
With tipped employees it’s a little harder to prove underreporting compared to straight up fraud in claiming credits if they’re literally never spending it, or spending it in cash on untraceable experiences, but it shouldn’t be hard if the IRS looks at their lifestyle and bank statements to see that they’re vastly underreporting tips. The only possible defense the people have is that they once found a large trove of cash in a field from a year that they filed a tax return that’s beyond the statute of limitations, and gradually sneak some cash out of it every once in a while. So one of the first questions the IRS will ask you will be “How much in physical currency did you have access to on X date?”, and you’ll have no idea why you’re being asked, but instinctively give a lowball figure if anything, when the IRS would have less ammo to use if you just said “eleventy billion”.
I don’t really consider it optional, so I don’t resent it. It’s part of the cost of the meal, because that’s how the restaurants work in the US. If I didn’t have the extra 15-20%, I wouldn’t be eating out. If service is really, really bad, they get less, or in extreme cases, nothing at all. I don’t generally tip less if something happens outside of the wait staff’s area of influence though, I just complain and/or don’t come back.
I don’t resent people who do things for me making a living.
The majority of restaurants when I was working in them (illegally - without a work permit, so you can imagine there was some disregard of the law) ignored the pitiful minimum wage, so most staff lived on what they made in tips
I’ve worked in that industry and have much empathy for the long hours, hard work and distinct absence of a career path. A number of my colleagues were students, getting cash to fund partying, but there were also single mothers with no other employable skills/qualifications and no choice but to work in the service industry.
I can afford to eat at fancy restaurants; it follows therefore that I can afford to tip.
Audit rates are higher in the group making $25K or less annually compared to some groups making more, because of investigation of possible EITC abuses. Still, someone making $500K and above is way more likely to be audited (though overall, the IRS has been going after fewer people in recent years).
So what exactly is your point? That it is impossible to change social customs? That it is ridiculous to complain or lobby against social customs you find stupid, useless, outdated or unfair? Sounds rather defeatist and conformist to me.
Fact: A LOT of once required social customs have died out or at least become voluntary/less expected. A LOT of customs that used to be socially required just because “doing otherwise is just not done” or because of “what would people say” no longer are. There’s a lot of things we do today that would have been socially unacceptable or at least socially questionable only 40 or 50, let alone 100 or 120 years ago. Those things changed because people were found who criticized the practices and who had the courage to go against the grain and refuse to follow them, not because people sat around waiting for a more tolerant time to magically come about, all the while mocking those who did speak out against established customs.
You mention having to wear clothes as something you don’t like but do anyway due to social expectations. Do you know how many social expectations concerning dress and personal grooming existed until well within living memory that have been abolished or at least marginalized or made YMMV. You act as if nothing can be done about changing the social requirement that people wear clothes. Of course something can be done, if enough people decide that the social rule against nudity is useless. We may not even be so far away from such a development. 120 years ago or so, it would have been shocking for a woman to wear a skirt that showed her ANKLES. Today, it’s tolerated for a woman to walk down the street in a halter top and tight Daisy Duke shorts that uncover her whole legs and a little something besides. Perhaps in 100 years (or 50 or 20 or 10 years) we will have decided to do away with even the last remaining conventions in this regard and public nudity will be tolerated.
A good example of a social custom concerning outward appearences that has DRASTICALLY changed is that of “going into mourning”. Today in the West, there is NO expectation of this and many people don’t even wear dark clothes to a funeral, but long ago, it was customary that when someone related to you died, you wore only black clothes for a period of time (in some cases white clothes were an acceptable alternative and half-mourning with some other colors was allowed after a time). Some people (mainly men and some very poor people) limited this to mourning bands around their hat/suit sleeve, but this could be considered cheating. After Queen Victoria started making a major display of her mourning for her husband, these customs were particularly systematized by etiquette experts, and specific periods of mourning were prescribed for specific degrees of kinship, with longer periods expected of women (certainly widows) than men. A widow was expected to spend at least two years in mourning (a widower, I think, only one), which meant not only wearing black, but also avoiding joyous social occasions. Today we expect nothing of this from people and would consider it a useless attack on their liberty that does nothing to benefit the deceased. Now imagine you lived in 1900, the year before Queen Victoria’s death, and the Internet already existed. You went on a discussion forum and a widow wrote in complaining about being expected to wear black and avoid jovial social occasions, giving point by point arguments about why the custom is stupid, unfair, useless, and should stop. Would you tell her “I don’t like wearing black mourning clothes, but it’s socially expected, so I wear black when a family member dies, and I find those who rant about having to wear black after a loved one’s death ridiculous”?
Most of the waiters around here have spent most of the last 15 months being unemployed or underemployed, and unemployment only goes so far.
We don’t have to tip, and normally would only tip 2-4 CHF on a bill that’s 100 CHF or more. Yesterday we had a fantastic lunch, and tipped the waiter a lot more than a few francs. We had fun, and he made it happen, so we wanted to share.
Probably wouldn’t tip quite that much normally, but it was our first outing in a long time.
I agree and that is why I hate tipping. There seems to be a lot of hostility in the thread to those who want to abolish tipping, calling them cheapskates and the like, but not a single poster has said that the prices shouldn’t go up to compensate the server for a lack of tips. I agree with the no tipping for several reasons:
I want the up front price. No games, no social customs or pressure. Just show me what I am expected to pay and I will pay it.
Good service should be expected in the service industry and not offered only on the payment of a bribe. I expect the mechanic to fix my car competently, the plumber to stop the leak, the doctor to fix my health issues, the lawyer to represent me well in court, and the waitress to bring my food and drink promptly and courteously. All of these people should be paid the market wage by their employer and if the job is not done right, they should be replaced, not just be denied extra income.
It is insulting. You don’t tip professionals. The very idea of tipping implies that you are of a higher social status than the peasant who is serving you. Let’s give these people the dignity of doing a job well and getting a paycheck which represents their work. Flipping money at them like they are a 14 year old errand boy smacks of an insult to me.
The percentage tipping system makes no sense in terms of compensation. If on two nights I go to the same restaurant, but the first night I want to treat myself so I order the surf and turf and a nice bottle of wine, the server will get a large tip based on a percentage. The next night if I am tired and just get the club sandwich and a glass of water, she will get a much smaller tip even though on both nights, she did exactly the same job and offered the exact same service. That makes no sense.
Is this really true. I was thinking about this thread today when we were delivering the end of year gifts to my kids’ teachers. How is a $50 gift certificate at christmas and the end of a year as a thank you different than a tip? I gave my shoulder surgeon a bottle of whiskey at my last appointment, again as a thank you but it doesn’t really seem different than a tip and while we can argue about teachers making a living wage the surgeon certainly does.
I wouldn’t consider those tips. They seem more like gifts because of your relationship with them. Would someone call you a cheapskate if you didn’t give those gifts? Is it expected?
The teacher gift would certainly be something that only cheapskates wouldn’t do. There is a whole collection process through the PTA to also get the teacher’s gifts and other presents. We probably spend $400 on teacher presents. I think there is more pressure than in a restaurant when no one knows if I’ve tipped until after I leave the restaurant.
The surgeon probably doesn’t expect a gift but based on the walls of his off he sure gets a lot of autographs, jerseys and other swag from his famous patients so the presents are certainly normal.
