[HN Gopher] No tax on tips: Why politicians love it, and economi...
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No tax on tips: Why politicians love it, and economists don't
Author : paulpauper
Score : 45 points
Date : 2024-08-15 03:43 UTC (19 hours ago)
(HTM) web link (www.npr.org)
(TXT) w3m dump (www.npr.org)
| kogus wrote:
| If there is no tax on tips, what is to stop me as an independent
| contractor from charging $1.00 for all my services, and agreeing
| with a client that they'll just write in the "real" balance in
| the "gratuity" line that suddenly appeared on their invoice?
| Income is income. It should all be taxed the same. Which is to
| say, as little as possible.
| fumeux_fume wrote:
| The article cited that it would come with limits and
| restrictions to prevent people from abusing it.
| iscrewyou wrote:
| I presume if you are caught, the IRS or the court will hold you
| in the wrong for fraud and tax evasion. Because they get to
| interpret the law, not you.
| JumpCrisscross wrote:
| > _presume if you are caught, the IRS or the court will hold
| you in the wrong for fraud and tax evasion_
|
| What is the difference between a discretionary bonus and a
| tip? What if I add a tip line to my business invoices?
|
| The best solution is an income and deduction limit, _e.g._
| you can 't claim if you earn more then 2x median wage
| ($85,600 [1]) and/or the deduction is capped at the greater
| of $10,000 and 20% of your AGI.
|
| Without an income deduction, I assure you, I _will_ figure
| out how to get tipped.
|
| [1] https://en.wikipedia.org/wiki/List_of_U.S._states_and_ter
| rit...
| quantified wrote:
| So many receipts have a tip line already, why not?
| treebeard901 wrote:
| This is the same Justice System that recently ruled a
| gratitutiy for a Judge after a ruling isn't a form of
| bribery or corruption. So your mileage may vary.
| rayiner wrote:
| They didn't do that. They ruled that gratuities and
| bribes are two different kinds of corruption that require
| different proof and are made illegal under different
| laws.
|
| For example, this helpful primer on the "differences
| between the offense of bribery and the offense of
| accepting a gratuity" was last updated in 1998:
| https://www.justice.gov/archives/jm/criminal-resource-
| manual...
|
| You should consider reading legal news that doesn't lie
| to your face.
| AnthonyMouse wrote:
| > The best solution is an income and deduction limit
|
| You don't have to help them try to make it make sense, it
| isn't intended to make sense.
|
| A completely sensible proposal is to lower taxes on the
| middle class. But that's also entirely uncontroversial and
| furthermore they repeatedly say it and then don't do it so
| no one believes them and therefore no one pays attention to
| them if they say that.
|
| "No tax on tips" gets people excited because a) there are
| _a lot_ of service workers (which is the point; that 's a
| lot of votes) and b) anybody can see that it's a tax
| loophole so large that even non-service workers can concoct
| a way to get in on it, but c) they haven't heard it before
| and it sounds like the kind of thing that _could_ pass,
| because it won 't cost the government too much revenue if
| the only people getting it would be a couple of waitresses
| and they themselves who will, unlike other people, come up
| with an ingenious plan to use this to avoid paying taxes
| anymore.
|
| In other words, it's a silly proposal with extremely high
| memetic fitness. Don't try to fix it, just realize that
| what working people actually want you to do is lower their
| taxes.
| JumpCrisscross wrote:
| > _there are a lot of service workers (which is the
| point; that 's a lot of votes)_
|
| Specifically, Nevada.
| twoodfin wrote:
| The income tax burden on the middle class has been
| dropping for decades under tax policies across
| administrations of both parties, from an effective 19.1%
| in 1979 to 13% in the last pre-COVID year of 2019:
|
| https://www.taxpolicycenter.org/statistics/historical-
| averag...
| blitzar wrote:
| The 20% performance fee in the 2 and 20 for hedge fund
| managers can easily become a _tip_ on their tax returns,
| but I dont expect they will be back at the table asking
| what they did so wrong that would deserve such a paltry
| tip.
| basch wrote:
| I personally would love for the world NOT to move towards
| MORE tipping, which a tax exemption would encourage.
|
| Wouldn't it make more sense to bump standard deduction to
| $85,600. If someone is making more than $85,600, they pay
| taxes whether its tips or not.
| deafpolygon wrote:
| Unless you're wealthy, in which case you can hold the IRS
| hostage for as long as you want until they drop the case.
| pas wrote:
| are you referring to a particular case?
| trothamel wrote:
| Disallowing tips from corporations seems like it could go a
| long way to curbing abuses.
| adgjlsfhk1 wrote:
| How does that work with a person on a business trip
| reimbursing their lunch while traveling?
| trothamel wrote:
| Either you or the company pays tax on the tip portion of
| the reimbursement.
| JumpCrisscross wrote:
| > _Either you or the company pays tax on the tip portion
| of the reimbursement_
|
| Who tracks this? Either it's unenforceable or you lose
| Nevada because you _de facto_ banned tax-exempt tipping
| on business meals.
| gav wrote:
| I imagine that it would be along the lines of:
|
| If you are a service worker earning less than $44,725 (the
| Federal 12% bracket) your first $10,000 of tips are tax free.
|
| This would mean that an income of $40,000 including $10,000
| tips would owe roughly $1,748 Federal tax vs. $2,820 tax.
| kurthr wrote:
| Which means that almost all tips would be taxed. Most tipped
| workers make over 30% of their income in tips, and certainly
| the highest tipped workers that pay the most taxes do. That
| makes not taxing the first 25% of tipped income which would
| only be taxed at or less than 12% has a very marginal effect.
|
| Plenty of bar tenders make >$100k/yr with <$30k in non-tip
| income. Taxing "only" $60k+ of their $70k in tip income looks
| pretty silly. You're going to save them at most $1200 when
| their taxes are already well over $12k.
|
| I just don't get why one would want to promote tipping
| culture with financial incentives, when it's already fairly
| exploitative of the workers.
| LorenPechtel wrote:
| And what exactly constitutes "service worker"??
|
| Because a lot of professional stuff is considered service
| occupations.
| notepad0x90 wrote:
| I don't understand your last sentence, why as little as
| possible? is it better for the country to grow ever more deeper
| into debt or for politicians to get funding for their promises
| by appeasing billionaires and CEOs? it is just as important to
| pay taxes as it is to vote. I would even say the more taxes you
| pay, the more invested in politics and civic responsibilities
| you would become.
|
| Excessive taxation is bad but I have never seen anywhere near
| excessive taxation in the US. The general ailments and
| downtrends in American society started right around the time
| when taxation (especially the corporate kind) started getting
| cut and we moved away from the gold standard for our money.
|
| For once I'd like to see a politician promise to raise taxes
| and use that revenue to fix things and actually win. Perverse
| financial incentives are ruining everything.
| cscurmudgeon wrote:
| US has a lot of public spending fraud and wastage. Just a few
| examples
|
| 1. San Jose Failed To Adequately Track $300 Million In
| Homelessness Spending
|
| https://sd15.senate.ca.gov/news/mercury-news-audit-san-
| jose-....
|
| 2. U.N. Has Flown More Than $2.9 Billion in Cash to
| Afghanistan Since the Taliban Seized Power, Diverting U.S.
| Funds https://www.propublica.org/article/united-nations-cash-
| afgha...
|
| 3. California put hundreds of millions of homelessness
| dollars at risk because of its "disorganized" and "chaotic"
| anti-fraud policies, according to a critical federal audit
| released today.
| https://calmatters.org/housing/homelessness/2024/08/hud-
| hcd-...
|
| > For once I'd like to see a politician promise to raise
| taxes and use that revenue to fix things and actually win.
| Perverse financial incentives are ruining everything.
|
| No. We should vote for no more new taxes (not a single cent
| more) till we audit at all levels of government and find out
| how much fraud and waste is there and have a plan to fix it.
|
| Anything else would be illogical.
| aidenn0 wrote:
| The deficit is about 1.5T annually. You'd have to find a
| missing $3B 500 times per year to make that up.
| cscurmudgeon wrote:
| > $3B 500 times per year to make that up.
|
| You don't think that is possible? Why?
|
| https://www.gao.gov/products/gao-24-105833#:~:text=What%2
| 0GA....
|
| > GAO estimated total direct annual financial losses to
| the government from fraud to be between $233 billion and
| $521 billion, based on data from fiscal years 2018
| through 2022. The range reflects the different risk
| environments during this period
|
| That is just fraud. Wastage will be probably be higher
| lol.
|
| It is morally wrong to pour more water into a container
| with holes in the middle of water shortage.
| AnthonyMouse wrote:
| Not only that, you can separate the waste into several
| different categories.
|
| The first is purposeful waste. That is, a corrupt program
| that diverts tax dollars into the coffers of some
| corporation with lobbyists. This is extremely common in
| the DoD, for example, and identifying these has extremely
| high gains because the program can be deleted wholesale.
|
| Then there is simple inefficiency. The government's
| website is incapable of doing something it should be
| capable of doing and then the government has to employ an
| army of clerks to do it by hand. These can be pretty big
| gains too. If you can reduce the number of clerks by 80%,
| that's a lot of money.
|
| Then there is unnecessary complexity. Most of this comes
| directly from Congress. Somebody needs to go through all
| the existing laws and do a cost/benefit analysis to see
| which ones are still relevant and have a net positive
| effect, and get rid of the ones that don't. More than
| that, look at the laws as a whole and see if they make
| sense. We have a slew of programs that all have the same
| ostensible purpose, e.g. to provide assistance to the
| poor, but then they all have different applications and
| qualification conditions and phase outs and benefits.
| Combine them all into a single system that provides a
| cash benefit and you can eliminate a lot of bureaucracy.
| And for both of these, the savings isn't just to the
| government -- it's also to the citizens who have to
| interact with the government. So even though the savings
| in terms of tax dollars might be smaller than the other
| categories, the value here gets doubled because it's also
| a savings to the public in time and paperwork.
|
| We have to start doing these things.
| LorenPechtel wrote:
| Yeah, there's a lot of inefficiency with handling stuff
| for the poor. But I suspect a lot of it is deliberate,
| the more friction in the system the more people get
| improperly denied or are unable to jump through the
| hoops. And look at what has been happening in some red
| states--they're in a rush to kick people off welfare and
| the system can't handle the load. And since they fail to
| prove eligibility they're kicked off.
|
| While I think the system is in a major need of a cleanup
| I don't expect it to free up money.
|
| I also agree our legal system needs a rewrite.
| Unfortunately, it's an impossible task because things
| change. To *some* extent it could be handled by having
| judges actually change the law (provisional while appeals
| are pending) but sometimes one judicial ruling will
| invalidate many laws. (The one that I think probably
| changed the most laws was the 10th Circuit Court's ruling
| on top equality. Six states became topfree with the
| stroke of a pen and there's an awful lot of local laws
| involved. _Roe_ affected more people but since those were
| generally state laws there probably were fewer
| jurisdictions involved.)
|
| I would like to see a system in which unclear law is
| automatically unconstitutional. The defendant should get
| to choose the most favorable interpretation of what the
| law says. And if it's not clear to the average person to
| whom it applies (thus, for example, a law regulating
| doctors needs to be clear to doctors, but need not be
| clear to the average person) it's also unconstitutional.
|
| And, in addition to the purposeful waste you refer to
| there is purposeful exploitation. A nice chunk of change
| could be freed up from the Medicaid system this way. The
| problem is the federal government pays a *percentage* of
| the Medicaid costs. Thus you see drug companies colluding
| with states. Cover our expensive drug X but don't cover
| the generic, we will rebate you more than the state share
| of the price difference.
| aidenn0 wrote:
| So in a fantasy world where we could eliminate all fraud
| without spending a single dollar on enforcement[1], we
| could cut the deficit by somewhere between 1/7 and 1/3,
| and would still have to find over $1T more money somehow.
|
| The deficit is so absurdly high at this point that we
| need to both cut spending (and yes, any obviously
| wasteful spending is a good place to start) and increase
| revenue.
|
| > It is morally wrong to pour more water into a container
| with holes in the middle of water shortage.
|
| I have no clue what you are trying to say with this
| analogy, so I'll just take it at face value and point out
| that a human being is a container with holes.
|
| 1: https://www.bitsaboutmoney.com/archive/optimal-amount-
| of-fra...
| atmavatar wrote:
| I would have gone the pedantic route and point out that
| you can only fill a container with water if it has at
| least one hole.
| cscurmudgeon wrote:
| In your fantasy world, we tax and raise trillions? Want
| to see the math on it.
|
| Did I say anywhere no other fraud or wastage is there?
| Did I say no new taxes at all?
|
| I said no new taxes without addressing waste.
|
| You can do two things in sequence.
| Iwan-Zotow wrote:
| > U.N. Has Flown More Than $2.9 Billion in Cash to
| Afghanistan Since the Taliban Seized Power, Diverting U.S.
| Funds
|
| and why this is inefficient?
| pdonis wrote:
| The GP said that _income_ should be taxed as little as
| possible. That doesn 't necessarily mean taxes, period,
| should be as little as possible. One could just tax things
| other than income.
|
| From an economic standpoint, it makes sense _not_ to tax
| income because income is production, and taxing production
| reduces the incentive to produce, which is the last thing we
| need. If we have to tax something, it makes more economic
| sense to tax consumption, for example with a national sales
| tax.
|
| _> The general ailments and downtrends in American society
| started right around the time when taxation (especially the
| corporate kind) started getting cut and we moved away from
| the gold standard for our money._
|
| I don't think this historical narrative is correct. First,
| the two things you mention did not happen at the same time;
| tax cuts, at least if we are talking about income taxes, more
| or less started with Reagan in the 1980s, but the US went off
| the gold standard in 1933 under FDR. (Technically the US
| still claimed to support converting dollars to gold
| internationally until 1971, but that's a relatively minor
| change compared to what happened in 1933.)
|
| Second, "general ailments and downtrends" is very broad and I
| don't think one can pin down a particular time when they
| started.
|
| Third, as I believe pg pointed out in one of his essays, US
| government tax revenue as a percentage of GDP has varied very
| little over decades even while tax rates have varied a lot.
|
| _> Perverse financial incentives are ruining everything_
|
| I don't disagree with this as a general statement, but I
| think the tax code is a fairly minor contributor to the
| perverse financial incentives as compared with the government
| (via the Fed) printing money. Historically, monetary
| debasement has always led to civilizational decline.
| curtisf wrote:
| _Earned_ income should correspond to productivity.
|
| But unearned income enjoys a dramatically lower tax rate
| (the capital gains rate is lower than income rate, and
| capital gains are not subject to FICA/self-employment
| taxes)
| AnthonyMouse wrote:
| The capital gains rate is lower because the way capital
| gains are calculated causes nominal price increases due
| to inflation to be counted as an increase in the value of
| the asset. This is a pretty dumb way to do this -- just
| calculate the capital gain in inflation-adjusted dollars
| instead -- but the current system isn't inherently to the
| advantage of capital gains. For long-held low-risk assets
| it typically goes the other way because so much of the
| "gain" is only on paper but gets taxed anyway. And short-
| term capital gains are taxed at a higher rate.
| pdonis wrote:
| What you are calling "unearned income" can still
| represent production indirectly, since it is income from
| passive investments, which are supposed to give returns
| based on creating wealth. It is true that that isn't
| always the case, however, particularly when such
| investments can include various sorts of derivatives and
| other zero-sum transactions.
|
| That said, if _no_ income were taxed at all, any
| disparity between how the various kinds of income were
| taxed would go away.
| throwaway14356 wrote:
| you aren't wrong but i do think an organization that large
| with that many customers and attention from many more should
| be able to make and sell useful products to the world. Simply
| forcing people to pay is a rather crude and unsophisticated
| approach. It takes a lot of men to cash in the proverbial
| protection money.
|
| A simple example, we have periodic checks for bicycle lights.
| If yours doesn't work you get a fine. If you have plastic or
| cash it would be a good idea if the government employee would
| fix your light and/or sell you a new one. You are supposed to
| walk while holding your bike. Everyone does that until they
| are around the corner. They can fix car lights too, deliver
| food and drive for uber. etc
| AnthonyMouse wrote:
| > I don't understand your last sentence, why as little as
| possible?
|
| It should come with a corresponding reduction in government
| waste. The existing government budget contains a level of
| inefficiency which is difficult to comprehend. The scale of
| it is so large it's hard to wrap your head around it.
|
| > I would even say the more taxes you pay, the more invested
| in politics and civic responsibilities you would become.
|
| This doesn't seem to be the case. In fact, it tends to go the
| other way. The people who have lives and just want to go
| about their business (i.e. the middle class) are taxed
| heavily specifically because they don't have time to get
| involved in politics and then are poorly represented when
| politicians are slicing up the pie. The super-rich,
| meanwhile, are highly involved and then avoid paying.
|
| > The general ailments and downtrends in American society
| started right around the time when taxation (especially the
| corporate kind) started getting cut and we moved away from
| the gold standard for our money.
|
| US government revenue has been stable as a percent of GDP
| since the end of WWII and growing over time in real dollars
| per capita. Taxation per capita, even adjusted for inflation,
| is now _higher_ than it was _during_ WWII. That level of
| taxation is... high.
|
| As to your point, multinational corporations avoid paying
| those taxes: Since real government revenue has been going up
| rather than down, guess who pays?
|
| > For once I'd like to see a politician promise to raise
| taxes and use that revenue to fix things and actually win.
|
| Doing this is not really possible. Between state and federal
| income, payroll, sales, property and other taxes, the average
| person in many states is already paying more than 50% of
| their compensation in tax.
|
| Even if all you care about is tax revenue, there comes a
| point at which increasing taxes lowers government revenue. If
| you raise total taxes from 5% to 10% and that causes the
| economy to contract by 10%, that's maybe not great for wage
| earners, but government revenue has increased by 80%. If you
| raise total taxes from 55% to 60% and it causes the economy
| to contract by 10%, even government revenue _goes down_
| because 55% of 100 is more than 60% of 90.
|
| The problem isn't that the government doesn't have enough
| revenue, it's that most of that money might as well be set on
| fire because it spends it so inefficiently. And whether you
| think it should instead be returned to the taxpayer or spent
| in some other way, the status quo is absurd and
| unsustainable.
| somedude895 wrote:
| Taxes should be as high as necessary but as low as possible.
|
| Debt should be reduced by reducing government spending, not
| by higher taxes.
|
| I don't know where you get the idea that paying taxes somehow
| makes you more invested in politics. Switzerland has very low
| taxes and yet the whole political system is based on civic
| involvement with all but the top political offices being done
| by people as a sidegig rather than a career. Meanwhile
| Germany is a high tax country where most people are just fed
| up with politics and government because politicians are so
| far removed from civic society.
| aidenn0 wrote:
| > For once I'd like to see a politician promise to raise
| taxes and use that revenue to fix things and actually win.
| Perverse financial incentives are ruining everything.
|
| The 2000 election was a debate over whether to use the budget
| _surplus_ to reduce taxes or increased government spending.
| The "reduce taxes" side narrowly won, and then a year later
| the death of 3000 people provoked us into increasing spending
| by several hundred billion doallars per year. That doesn't
| completely explain the current unsustainable deficit ($1.5T
| or about 5% of GDP !!), but it's a good chunk of it.
|
| Of course the Bush tax cuts were largely retained under Obama
| with a bipartisan bill that made them permanent with no
| corresponding cut to spending.
| Teever wrote:
| > A self-made entrepreneur, Kahre, 48, paid his workers in gold
| and silver coin, and said they could go by the coins' face
| value -- rather than the much higher market value of their
| precious metal content -- for federal tax purposes. He did not
| withhold taxes from their wages, and he provided the same
| payroll system to 35 outside clients, which were other local
| businesses.
|
| https://www.reviewjournal.com/news/employers-gold-silver-pay...
| munchler wrote:
| So if they pay you $1 for your services and decline to tip you,
| are you OK having no legal recourse?
| JumpCrisscross wrote:
| > _if they pay you $1 for your services and decline to tip
| you, are you OK having no legal recourse?_
|
| Plenty of third-world business arrangements work like this.
| The problem is it incentivises extrajudicial enforcement.
| gota wrote:
| I can sort of see the articles "Gen Alpha introduces: "tip
| first""
| LorenPechtel wrote:
| And you don't hire you next time around. In any sort of
| ongoing relationship not tipping appropriately wouldn't work.
| standardUser wrote:
| If you have a compelling reason to believe that "income should
| all be taxed the same", I'd like to hear it. An easily solvable
| loophole is not compelling.
| zeroonetwothree wrote:
| Having income taxed different encourages evasion/fraud,
| distorts economic activity, and raises compliance costs
| AnthonyMouse wrote:
| The notion of having graduated rates is also from an era
| when the government operated very differently.
|
| Once upon a time, quite a long time ago, most government
| spending was public services, e.g. roads and constables and
| teachers. Government assistance was not a major
| expenditure. Maybe they would have operated a homeless
| shelter but there were no food stamps, no social security,
| no EITC. Then you were faced with the government needing to
| pay the constable but if you took the money from someone
| who was already close to starvation, they would starve, so
| the proposal comes to take more of the money from doctors
| and lawyers. Okay, sure, so make the marginal rates lower
| on the poor then. Progressive rate structure.
|
| Then we added food stamps and all the rest of it. Now, most
| of these programs would be better as cash, but either way
| they have phase outs so you're not giving food stamps to
| Jeff Bezos. Except that phase outs and marginal tax rates
| are really the same thing. So we built a whole complicated
| system to impose lower marginal tax rates on lower income
| people, and then a _separate_ whole complicated system to
| impose means testing and phase outs for government
| benefits, and these systems _cancel out_ because one of
| them lowers the marginal tax rate of lower income people
| and the other one raises it.
|
| This is dumb. Get rid of both complicated systems, make the
| benefits simple unconditional cash and then use a uniform
| tax rate.
| tux1968 wrote:
| Years ago (1991) in Canada, there was a massive change to the
| sales tax structure. It was quite convoluted, where things like
| 1 donut incurred tax, but a dozen had no tax. Potatoes had no
| sales tax, but of course, GST was levied on car sales.
|
| Several large car dealerships immediately advertised that they
| were no longer selling cars, but expensive potatoes. If you
| bought a $12,000 potato from them (no tax), they'd throw in a
| free car.
|
| You can imagine how long the government put up with that.
| maerF0x0 wrote:
| Those might be the most honest salesmen of all time... Yeah
| it's only $12k, but it is a potato. :grin:
| tayo42 wrote:
| Wrong direction to take the country. How about just no tips?
| Don't encourage this even more
| kelnos wrote:
| What a terrible idea. Instead, let's do away with tipping culture
| entirely, and require every job be subject to a minimum wage,
| over that's actually set to something livable.
|
| On the other hand, if tips stop being taxable, can I tip less?
| Like maybe 18% instead of 20%?
| shiroiushi wrote:
| Yeah, the tipping culture in America is so insane. It drives me
| crazy when I visit: I have to spend so much mental energy doing
| a lot of math to figure out how much to leave: find the pre-tax
| total, multiply by 0.18, then subtract any stupid fees (like
| the "technology fee" I got at a NY restaurant) so I can pit the
| servers against their management. Even worse if they charge an
| extra fee for not paying in cash. It's so aggravating.
|
| In sane countries, there's no such bullshit: I just take the
| bill to the cashier, take out my card, and pay it.
| standardUser wrote:
| Just give $2 per $10, very simple math. But do look out for
| gratuity already included on the bill.
| lilyball wrote:
| Or instead of going through all that work to look for reasons
| to justify tipping less, you could just do a simple 20% on
| the subtotal.
| tredre3 wrote:
| A national ban on taxing tips would disproportionately benefit,
| for example, a South Carolina server who earns a reduced minimum
| wage and makes a large portion of their income through tips.
| While a server in California, where tips make up a smaller
| portion of their income, would benefit less.
|
| Bartenders in California still make on average $200 per shift in
| tips. That's likely 50%+ of their income that won't be taxable
| anymore?
| ryandrake wrote:
| This is classic class division: "You shouldn't want to get X
| because your neighbor is getting X+1."
| frakkingcylons wrote:
| It's not. Why should the back of the house pay more on taxes
| just because they don't get tips?
| ryandrake wrote:
| The back of the house is not suddenly paying more. The
| front of the house would just be paying less.
| tadfisher wrote:
| The argument worked against student loan forgiveness.
| JumpCrisscross wrote:
| > _Bartenders in California still make on average $200 per
| shift in tips_
|
| And California is one of the few states without a separate
| tipped minimum wage [1].
|
| [1] https://www.shouselaw.com/ca/labor/wage-hour/tips/
| r00fus wrote:
| How about, all income is taxed similarly and a livable minimum
| wage?
|
| Tip culture is a vestige of a feudal and racist past.
|
| https://www.politico.com/magazine/story/2019/07/17/william-b...
| JumpCrisscross wrote:
| > _How about, all income is taxed similarly and a livable
| minimum wage?_
|
| What does this mean? Flat tax? How do you define income? Do
| unrealised gains count? How granular do we get with livability?
|
| _Ad absurdum_ , would this scheme work across the entire
| planet? If not, why would it work in Mississippi and
| Massachussetts?
|
| Your principles are solid. But "similarly" and "livable"
| econmpass the entire Overton window.
| bruce511 wrote:
| Similary does not necessarily mean a flat rate. Or indeed any
| rate (the minimum rate on a sliding scale can be 0).
|
| Imagine a world where a hairdresser (for example) tells you
| the price of the service. You pay that number. The worker is
| paid a fixed wage. (Ideally a wage high enough that you can
| live on 1 job.) That person starts paying tax on income once
| they reach a certain level etc.
|
| It may surprise you that most of the world uses this system.
| What happens in Mississippi et al is already the "weird
| exception".
| JumpCrisscross wrote:
| > _Imagine a world where a hairdresser (for example) tells
| you the price of the service. You pay that number. The
| worker is paid a fixed wage. (Ideally a wage high enough
| that you can live on 1 job.) That person starts paying tax
| on income once they reach a certain level etc_
|
| You're describing every OECD country. The only novelty
| America adds is the sales tax after, which is a labelling
| matter.
|
| > _may surprise you that most of the world uses this
| system_
|
| What did you describe that amounts to a system? My point is
| fair and similar isn't a system description, it's a vision
| statement at best.
|
| Also, are you seriously arguing about the livability of
| American wages on a quality of life basis relative to the
| entire planet? Because if you look at the poorest 10% of
| Americans, their average disposable income is positive [1].
| That doesn't mean there aren't huge issues, nor that the
| average explains every high-COL city. But having any
| dispoable income, by definition, means your income is high
| enough to live on.
|
| [1] https://www.bea.gov/data/special-topics/distribution-
| of-pers...
| r00fus wrote:
| "Taxed similarly" means a standard progressive tax, but "tips
| income" and "capital gains" are not given preferential tax
| treatment. All income becomes fungible and eligible for
| taxation normally. You can still have special tax treatment
| for things like retirement or medical benefits (in a perfect
| world the government
|
| Livable really means, someone on minimum wage should be able
| to afford housing and food/etc in a given area. Whether that
| means gov subsidized housing (e.g. HK residents pay like
| 300USD/mo rent) or a higher minimum wage is an implementation
| detail.
|
| Taken together, these would greatly reduce the income
| inequality (Gini coefficient) and lead to a more fair and
| stable society.
| bruce511 wrote:
| As a non-american I'm aware of the difference in tipping
| culture between here and there.
|
| While there are pros and cons for tipping, as a consumer I
| vastly prefer our system here (basically tipping is only
| expected in restaurants and 10% is considered plenty.)
|
| Other people are tipped occasionally, but its rare and mostly
| unexpected. People are paid on the basis that they aren't
| tipped.
|
| In the US it seems the opposite. As an employer I can reduce
| wages claiming "you'll make it up in tips". Patrons, aware of
| this, make random (20%+) donations to assist. Now the employer
| can use the "tips are better, no tax" argument.
|
| I get that everyone wants to pay less tax. I'm not sure that
| tax policy which encourages "taxing" customers on an individual
| basis to the detriment of workers getting a standard, living,
| wage is necessarily in anyone's best long-term interest.
|
| This approach will have long-term unexpected consequences. And
| I suspect that will be good for employers, bad for servers and
| patrons.
| shiroiushi wrote:
| As an American living in Japan, your system sounds utterly
| stupid too.
|
| Here, it's simple: the restaurant has a menu. Items on the
| menu each have a price that includes sales tax. You order
| items and eat them. When you're done, they give you a bill
| with a list of the items, the advertised prices, and the
| total of those prices. You then pay the bill.
|
| The main exception (and it is annoying) is some places that
| have "otoshi", which is some small, cheap dish of something
| you didn't ask for that you get when you sit down, and they
| tack onto the bill. It's basically a table charge. But
| there's a warning on the menu about it.
| deepfriedbits wrote:
| What's wild to me is that in the wake of touchscreens asking for
| tips at places you never thought to tip before, I felt like we in
| the States were having a national discussion on tipping.
|
| If any portion of tips is declared tax-free, I believe the
| practice of tipping will be locked into American society forever.
| srmatto wrote:
| In my opinion that is the insidiousness of it. It pits the
| patrons against the workers where owners and managers can just
| throw their hands up and blame it on tax law. We really just
| should pay people better and prices should be upfront.
| joshstrange wrote:
| I completely agree. Tipping before services are even rendered
| drives me up a wall. Tipping in general is just disgusting,
| it's exploitative (of almost everyone) and is normally just a
| way for a business to pay someone less and guilt the customer
| into making up the difference. I tip because I feel compelled
| to lest I suffer the consequences of not going along with this
| charade but I'd love for tipping to go away.
| big-green-man wrote:
| Oh please.
|
| A campaign staffer who isn't allowed to speak to the press
| singing her praises behind her back. Who buys this stuff?
|
| Economists don't like it because it's unfair? _Economists?_
|
| Everyone loves this idea. Tip workers love it. People who tip
| love it. People tip with cash when they can just to help tip
| workers avoid taxes. Tip workers prefer cash so they can get away
| with not declaring them. Of course the vice president adopted
| this for political reasons, the proposal by her opponent is just
| too damn popular not to. Her opponent did so too in case anyone's
| frothing at the mouth over me saying it.
|
| I just got done watching a horribly made movie called "Jones
| Plantation". Terrible, terrible movie with a very interesting
| premise. Watching people argue about how to better pay taxes
| really drives that premise home for me.
| JumpCrisscross wrote:
| > _Tip workers prefer cash so they can get away with not
| declaring them_
|
| In New York with honest friends who report their tips. They
| don't like cash. On card, it's automatically documented. With
| cash, they have to (a) manually enter and (b) deal with
| distrusting coworkers.
|
| Granted, they work at high-end bars and restaurants. I can
| imagine this varies regionally.
| 1propionyl wrote:
| (c) deal with cash tips vanishing from the till because the
| owner or manager wanted cash for drugs and/or sex workers
|
| (Blamed on unspecified employees, naturally.)
| manuelabeledo wrote:
| People who tip _love_ it?!
|
| I certainly don't. And I'm tired of having to think of
| someone's wages every time I go out for dinner.
|
| Some people, I would call them "old fashioned", who do love it,
| because it gives them some sort of reassurance that the service
| will be good, did tell me that if I don't like tipping, I
| shouldn't go out. That was a couple years ago. Guess what, I
| took their advice and now I don't eat out as much. Same goes
| for many others in my environment. People are getting fed up of
| paying $80 just in tips with subpar food.
|
| Honestly, I hope that not eating out becomes a trend. I know
| those who depend on others subsidizing their labor force with
| tips won't take the hint, but I won't shed a tear for those
| closing down.
| big-green-man wrote:
| People who tip love the idea of the workers not having to pay
| taxes, usually, yes.
| tekacs wrote:
| I wonder if the intent or hidden upside behind a policy like this
| would be incentivizing people to stop taking 'under the counter'
| cash tips and move them to be registered income / by credit card.
|
| To be clear, it seems like most tips have moved to CC already (at
| least in the areas I find myself in), but if there were any
| regions where cash tips are still used to hide from taxation,
| this could be a nudge to do less of that?
|
| I'm definitely dubious of the impact of anything like that, just
| a thought that came to mind when I saw this.
| dingi wrote:
| This is a proof that both politicians and economists are clueless
| perhaps on purpose. How about getting rid of this tipping thing
| as a whole? It has essentially became a way to scam customers.
| standardUser wrote:
| > How about getting rid of this tipping thing as a whole?
|
| Do you propose we make it illegal to tip?
| shiroiushi wrote:
| How about adding extra taxes on tips? Instead of taxing tips
| like regular income, tax them at 90%. Then no one will want
| to work for tips, and they'll be phased out quickly.
| 7jjjjjjj wrote:
| That would actually be amazing. I fucking hate tipping.
| Especially how it seems like there are 50,000 different
| random jobs that take tips and half the time you have to
| choose the tip before receiving the service, defeating the
| stated purpose!
| alxmng wrote:
| One option is to outlaw asking for a tip at a place of
| business. No screen prompting for a tip, no slot on a receipt
| to accept a tip, etc. Nothing could be displayed conditional
| on purchase (such as a receipt, a PoS terminal, etc.)
| adrianmonk wrote:
| That seems excessive. We could start by raising the minimum
| wage to a living wage and eliminating the special rules for
| tipped employees ($2.13/hour wage, etc.).
|
| If customers know the workers get paid decently, they
| probably wouldn't feel obliged to leave a tip. And business
| owners might switch to a no-tip policy since a better
| customer experience could attract more customers.
| eltoxo wrote:
| Or we could just keep the same system we have now and
| politicians could focus on real issues instead of meaningless
| bullshit like this.
| joshstrange wrote:
| > Do you propose we make it illegal to tip?
|
| Before services are rendered? Yes, I think I'd be ok with
| that.
|
| Really I'd like to see a groundswell of people refusing to
| tip but that's the catch-22, stopping tips hurts the person
| without fixing the underlying issue (being
| underpaid/dependent on tips). How do you take away the crutch
| without knocking the person down? I don't have a good answer
| but tipping currently is out of control and something needs
| to change.
| kkfx wrote:
| Pro-tax economist in an era where the source of money is private
| and just loan them counter "public debt" (an oxymoron by itself)
| are simply thieves or people convinced by thieves not much
| understanding economy.
|
| If you want social dynamics you want a world of SMEs not giant
| corps/conglomerate/* if you want social dynamics you want free
| education for anyone NOT to form useful idiots, Ford-model
| workers, but Citizens.
|
| The reality is that the current Agenda 2030 want anyone but a
| small set of nazi criminals "without ownership" to manage them in
| "smart cities" modern labor camp for prisoners/slaves as WELL
| described times ago by a historical thief behind the Bank if NY
| silver scam:
| https://dn790002.ca.archive.org/0/items/sciencegovernme00roo...
| read it, it's strange but short and you'll have a very good idea
| of the present world.
| nojvek wrote:
| This was a hard lesson for me. Presidential candidates promise a
| whole bunch of things to get voters to back them.
|
| Although even if they really wanted something e.g universal
| healthcare or no taxes on tips, a bill needs to go through house
| and senate.
|
| That's 100-ish representatives who need to vote yay on a bill to
| go through.
|
| Unlikely it gets passed if there's a 50/50 split in senate and
| house.
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