Vice President Kamala Harris has echoed former President Donald Trump’s proposal to end taxes on tipped income for service industry workers in a bid to court young people and working-class voters, Accounting Today and other news organizations reported.
"When I am president, we will continue our fight for working families of America, including to raise the minimum wage and eliminate taxes on tips for service and hospitality workers," she said at a rally Saturday in Las Vegas that included members of a local culinary workers union in attendance, CNN reported.
Trump had proposed the tax exemption in June, also in Las Vegas. His proposal would add between $150 billion to $250 billion to the federal budget deficit over 10 years, and possibly much more if it were to cause a shift in overall compensation from wages to tips, the Committee for a Responsible Federal Budget (CFRB) estimated.
Exempting tipped wages from federal taxes could trim the tax bills for the more than 6 million hospitality workers who reported a total of $38.3 billion in tipped income in 2018, the latest year for which IRS data are available, Accounting Today reported. That averages out to about $6,250 per tipped worker.
Such a plan could create incentives for workers and employers to shift more compensation from wages to tips and potentially keep some low-income households from accessing benefits like the child tax credit, economists cited by Accounting Today said.
It is unclear whether Trump or Harris would apply their proposals to Social Security and Medicare taxes, which would make the budgetary impact bigger and potentially leave millions of workers with smaller benefits in retirement.
The Culinary Union, which represents 60,0000 hospitality workers in Nevada, according to CBS News, endorsed Harris for president on Friday but previously dismissed Trump's proposal as "wild campaign promises."
"Vice-President Kamala Harris acknowledged the hard working men and women of the hospitality industry and committed tonight in Las Vegas to raise the minimum wage across the country and fight to end taxes on tips once elected as the next President of the United States of America," the union said in a statement.
Both of Nevada's U.S. senators, Democrats Jacky Rosen and Catherine Cortez Masto, have backed legislation to fully exempt tipped wages from federal income tax. They also support raising the federal minimum wage and eliminating the minimum wage gap for tipped workers nationally.