Vice President Kamala Harris has announced a new policy position to fight for ending taxes on tips for service and hospitality workers. She made this proposal while campaigning in Las Vegas with her running mate, Governor Tim Walz, promising to work towards eliminating federal taxes on tips earned by employees in the service industry. While this is a policy also supported by former President Donald Trump, the President does not have the authority to unilaterally exempt tips from federal taxes, requiring Congress to pass the measure for the President to sign it. White House press secretary Karine Jean-Pierre mentioned that President Biden also supports the proposal to eliminate federal taxes on tips.
The Culinary Union, representing 60,000 hospitality workers in Nevada, praised Harris for her policy announcement, with a commitment to raise the minimum wage across the country and fight for the end of taxes on tips if elected as the next President. Former President Trump had first expressed his support for eliminating taxes on tips in June, calling Harris a “COPYCAT” in response to her platform announcement. While Trump is not the first politician to propose such a policy, with historical attempts by former Rep. Ron Paul and former Rep. Phil Crane in the past, Harris’ proposal is estimated to increase deficits by $100-200 billion over the next decade, according to the Center for a Responsible Federal Budget.
With the upcoming Democratic National Convention, where more policy proposals could be presented, Harris has not introduced many new policy initiatives yet. It will be interesting to see how her campaign distinguishes itself from President Biden’s in the coming weeks. The call to eliminate federal taxes on tips is a bipartisan issue with broad support, although the practical implementation of this policy would require legislative action by Congress. Both Harris and Trump have championed this proposal, but its financial impacts, estimated to be between $100-250 billion over the next decade, need to be carefully considered in the context of overall government spending and budget deficits. It remains to be seen how this policy position will resonate with voters and how it fits into the broader economic policies of the two presidential candidates.
