CINCINNATI — It is the political discussion that is causing a stir in the service industry: the possible abolition of the tax on tips for service employees.
Both Vice President Kamala Harris and former President Donald Trump made this promise during the election campaign – Trump in June, Harris in August.
Both campaigns were announced in the swing state of Nevada, where the hospitality industry is a major employer.
In the US state of Ohio, Representative Jay Edwards has introduced Bill 643, which reads as follows: “The General Assembly declares its intent to exempt tips and gratuities from income tax.”
In a statement, John Barker, president and CEO of the Ohio Restaurant & Hospitality Alliance, said they were “aware” of the campaign promises.
“We are always open to ideas that support Ohio’s restaurant and hospitality industry and look forward to our continued work with the National Restaurant Association on the No Tax on Tips Act, which has been introduced in both houses of Congress,” he said.
Barker said they plan to work with Edwards throughout the legislative process.
“Tax policy plays an important role in the vitality of the restaurant and hospitality industry in Ohio and across the country,” Barker said.
At Christine’s Casual Dining in Western Hills, bartender Lorraine Feltman said it was “weird” to see restaurant servers at the center of the American political discussion, “but I’m glad they’re giving the servers credit.”
Waiters live primarily on tips, she said, noting that the minimum wage is lower for workers who receive tips.
The income saved from the elimination of income tax would mean more money for grocery shopping and trips with her children and grandchildren, she said.
For employees who receive tips, the tips are considered taxable income. Restaurant workers told us that cash tips used to be rarely reported. But with the increasing use of credit cards, that has largely stopped.
At Court Street Kitchen in downtown Cincinnati, operations manager Braheam Shteiwi said he supports his employees keeping their hard-earned tips.
“$20 to $30 for one of these guys every night, at the end of the week, that’s a lot,” he said. “It can make a big difference.”
Shteiwi expressed his joy that politicians are now focusing on workers, but acknowledged that there is still a long political road ahead to achieve this goal.
“Ultimately, it will put more money in their pockets,” he said. “I think it’s a good idea.”
The plan is full of rhetoric but lacks many details. Neither campaign has said how they plan to finance it.
The Committee for a Responsible Federal Budget estimates that this could increase the national debt by $150 to $250 billion within ten years.
Restaurant employees, however, said every penny saved was a penny earned.
“That would make a big difference,” Feltman said.
