Some US Restaurants and Servers Oppose Republicans' 'No Tax on Tips' Budget Proposal
Some segments of the US restaurant industry don't support President Donald Trump's proposal to eliminate federal taxes on tips, saying it would help too few people and obscure bigger issues in the way tipped workers are paid.
The Independent Restaurant Coalition, which represents nearly 100,000 restaurants and bars, has appealed to Congress to reconsider the proposal, which is part of the president's spending bill. Even some workers who rely on tips say they oppose making them tax-deductible. 'I think there's a huge hole in this concept of no tax on tips because a lot of restaurant workers aren't receiving tips in the first place,' said Elyanna Calle, a bartender in Austin, Texas, and president of the Restaurant Workers United union. 'It's not helping most kitchen workers, and oftentimes those are the people who are being paid the least.'
Tips included in sprawling tax cuts package. For now, making tips tax-free appears to have broad support among lawmakers. Both Trump and his Democratic rival in last year's US presidential election, former Vice President Kamala Harris, campaigned on the concept. The House included it in a tax cuts package approved last month. The bill would eliminate federal income taxes on tips for people working in jobs that have traditionally received them, as long as they make less than $160,000 in 2025. The Senate Finance Committee passed a modified version on Monday. Senators capped deductions at $25,000 and want to phase them out for individuals whose income exceeds $150,000. Eligibility would be based on earnings as of Dec. 31, 2024. Both the House and Senate committee measures would apply through the 2028 tax year. The Finance Committee specified that cash tips qualify but said the term applied to tips paid in cash, charged to credit cards, or received from other employees under a tip-sharing arrangement.
Main industry trade group supports tax-free tips. Wary of wading into politics, many restaurant chains contacted by The Associated Press about tax-free tips didn't respond or referred questions to the National Restaurant Association, including Waffle House, The Cheesecake Factory, First Watch, and the parent companies of Olive Garden, Applebee's, and Chili's.
The National Restaurant Association, a trade organization that represents nearly 500,000 US restaurants and bars, applauded the House's passage of Trump's spending bill and said it wants to see tax-free tips. The association estimates the measure would benefit more than 2 million servers and bartenders. But the US restaurant industry has more than 12 million workers, including dishwashers and chefs, according to government data. The Independent Restaurant Coalition says the no-tax-on-tips proposal leaves out too many of those workers.
A push to eliminate taxes on service charges. The coalition wants Congress to eliminate taxes on service charges, which are being used to compensate employees at an increasing number of restaurants. Around 15 percent of US restaurants add some form of service charge to customers' bills, according to the National Restaurant Association.
George Skandalos, a pizza restaurant owner in Moscow, Idaho, was tired of seeing servers count out hundreds of dollars of tips at the end of the night while people in the kitchen scrubbed the floor on their hands and knees. So he started experimenting with different compensation models. Skandalos tried pooling servers' tips and distributing them but ran into rules preventing that. He tried raising his menu prices and explaining that a percentage of each order was going to employee compensation, but customers didn't understand and kept tipping.
Skandalos now has a gratuity-free policy at his restaurant, Maialina. He charges a 20 percent service fee that is distributed to all employees and helps pay for benefits like paid vacation and parental leave. 'The vast majority of customers appreciate the effort,' he said.
Skandalos said no tax on tips doesn't acknowledge restaurants like his that are trying to distribute pay more equally. He would like to see service charges exempted from taxes. 'This bill is a very good start in terms of trying to leave more money in people's pocketbooks, but now let's finish what we started and make it a great thing for the restaurant industry overall,' he said.
Tipped workers seek higher wages. But Ted Pappageorge, the secretary-treasurer of the Culinary Workers Union Local 226 in Las Vegas, said restaurants should just pay their kitchen workers more to compensate for servers earning tips. 'No tax on tips is an opportunity for Republicans and Democrats to deliver something to working-class folks,' he said.
Pappageorge wants Congress to take up a separate bill introduced by Nevada Democrat Steven Horsford that would eliminate taxes on tips but also require restaurants to pay workers at least the federal minimum wage of $7.25 per hour. In 43 states, restaurants are currently allowed to pay tipped workers as little as $2.13 per hour.
Yolanda Garcia, a barista at Resorts World in Las Vegas and a member of the Culinary Workers Union, also supports Horsford's bill. Garcia said she makes $33,000 a year, including up to $600 per month in tips. 'Tips are never guaranteed,' she said, 'but if they were tax-free it would help make up for that uncertainty. It would help me get more groceries. Right now the price of everything has gone up,' Garcia said.
Calle, the Austin bartender and union leader, said she also benefits from tips, but they're inconsistent. She suspects tipping would decline if the tax-free provision passes because customers will resent it. For Calle, the underlying problem that must be solved is low base pay. 'I think that if we continue to make the shift into relying on tips for people, it gives incentives for companies to not raise wages,' she said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Al Arabiya
15 minutes ago
- Al Arabiya
Why is Saudi Arabia playing against USA in the CONCACAF Gold Cup?
This month, overshadowed somewhat by the FIFA Club World Cup happening simultaneously, the best national teams from North America, Central America and the Caribbean are battling it out in the biennial CONCACAF Gold Cup. The 2025 edition also includes a more unfamiliar international side: Saudi Arabia is competing alongside the likes of the United States, Mexico, Canada, Haiti and Panama for the continental prize. Here, Al Arabiya English explains why Saudi Arabia is playing in the CONCACAF Gold Cup. What is the CONCACAF Gold Cup? The CONCACAF Gold Cup is the leading international football competition for teams from North America, Central America, and the Caribbean. Organized by the Confederation of North, Central America and Caribbean Association Football (CONCACAF), the tournament determines the regional champion and plays a similar role to Asia's AFC Asian Cup, Europe's UEFA European Championship, South America's Copa America, or Africa's AFCON. Held every two years, the Gold Cup typically features 16 teams. The group stage progresses to knockout rounds, culminating in a final that crowns the continental champion. Mexico and the USA have had a near-exclusive duopoly on the competition since its inception in 1991, winning nine and seven titles respectively. The only other champion is Canada, which won in 2000 and is favorite to triumph in the current edition of the tournament having emerged as the region's strongest team in recent years. As well as being a prestigious continental competition, the Gold Cup is also a platform for national teams to test themselves in the high-pressure environment of tournament football as they plot a path towards the FIFA World Cup. With the 2026 FIFA World Cup due to take place across Mexico, Canada and the United States, the 2025 CONCACAF Gold Cup – also hosted in the USA and Canada – doubles up as a useful test event for next year's global showpiece. Why is Saudi Arabia playing in the CONCACAF Gold Cup? Put simply, Saudi Arabia is competing because it was invited. In late 2024, CONCACAF signed a strategic agreement with the Saudi Public Investment Fund (PIF), aimed at enhancing cooperation. One element of this was the extension of a formal invitation by CONCACAF to Saudi Arabia to participate as a guest nation in both the 2025 and 2027 editions of the Gold Cup – the latter of which will again be held in the United States. For CONCACAF, the Green Falcons' involvement brings a fresh competitive edge and increased international attention to the tournament. For Saudi Arabia, it offers the chance for coach Herve Renard and his players to test themselves against unfamiliar opponents as they build toward hopefully qualifying for – and playing in – the 2026 FIFA World Cup. Saudi Arabia's next World Cup qualifiers will take place in October, meaning these summer matches – at least three of them in the Gold Cup group stage, and three more if the Green Falcons make it to the final – provide valuable opportunities for players to have competitive game time. Has a non-CONCACAF team ever competed before? Yes, though this is the first time that Saudi Arabia has participated in this – or any other – continental tournament outside of Asia. While Europe, Asia and Africa have never opened up their continental competitions to external entrants, both CONCACAF and CONMEBOL (South American football's governing body) have done so with some regularity over the past couple of decades. Qatar was the most recent non-CONCACAF nation to compete in the Gold Cup, reaching the semi-final in 2021 and quarter-final in 2023. Brazil has also competed twice – finishing as runner-up to Mexico in 1996 and in third place in 1998. Other South American competitors have included Colombia – a losing finalist to Canada in 2000, Peru (2000) and Ecuador (2002). South Korea became the first upcoming World Cup host to take part – doing so in 2000 and 2002 – before South Africa participated in 2005 and Qatar played in the last two editions; as 2034 FIFA World Cup host, Saudi Arabia follows in their footsteps. Beyond the Gold Cup, South America's Copa America has also welcomed national teams from other continents. Mexico has been the most regular invitee, featuring in 11 tournaments and twice losing the final, while Costa Rica (6), USA (5), Jamaica (3), Panama (2) and Japan (2) have all made multiple appearances. Haiti, Honduras, Qatar and Canada have all featured once in the Copa America. Could Saudi Arabia win the Gold Cup? Absolutely. And if it does, Saudi Arabia would make history as the first non-CONCACAF nation to triumph at the Gold Cup. Australia is currently the only nation to win a major continental title outside of its own continent, having claimed the AFC Asian Cup trophy in 2015 on home soil after switching from competing in Oceania's OFC Nations Cup. Should Renard's team go all the way and win the Gold Cup final on July 6 in Houston, Saudi Arabia – already a four-time continental champion in Asia – could emulate that achievement. The Green Falcons won their opening match 1-0 against Haiti, courtesy of a first-half penalty from Al Ittihad striker Saleh al-Shehri. Further matches against the United States (June 19) and Trinidad and Tobago (June 22) in Group D will determine whether Saudi Arabia reaches the quarterfinals. Renard's Gold Cup squad combines experienced players from top Saudi Pro League clubs with a handful of rising talents, but the French coach has been negatively impacted by the participation of Al Hilal in the FIFA Club World Cup. Al Hilal's Saudi players were not prevented from competing in the tournament, which is happening concurrently – also in the United States. Green Falcons captain Salem al-Dawsari, defender Hassan al-Tambakti and midfielder Nasser al-Dawsari started Al Hilal's impressive 1-1 draw with Real Madrid on Wednesday, while team-mates Mohamed Kanno, Ali Lajami and Abdullah al-Hamdan would all likely have been picked to play for Saudi Arabia at the Gold Cup had they been available. Still, Renard has plenty of quality players to choose from and while winning the tournament may be a tall order, a deep run into the knockout stages feels like a realistic target for the Green Falcons.
Asharq Al-Awsat
4 hours ago
- Asharq Al-Awsat
Trump Extends Deadline for TikTok Sale by 90 Days
President Donald Trump announced Thursday he had given social media platform TikTok another 90 days to find a non-Chinese buyer or be banned in the United States. "I've just signed the Executive Order extending the Deadline for the TikTok closing for 90 days (September 17, 2025)," Trump posted on his Truth Social platform, putting off the ban for the third time. A federal law requiring TikTok's sale or ban on national security grounds was due to take effect the day before Trump's January inauguration. The Republican, whose 2024 election campaign relied heavily on social media, has previously said he is fond of the video-sharing app. "I have a little warm spot in my heart for TikTok," Trump said in an NBC News interview in early May. "If it needs an extension, I would be willing to give it an extension." TikTok on Thursday welcomed Trump's decision. "We are grateful for President Trump's leadership and support in ensuring that TikTok continues to be available for more than 170 million American users," the platform said in a statement. Digital Cold War? Motivated by a belief in Washington that TikTok is controlled by the Chinese government, the ban took effect on January 19, one day before Trump's inauguration, with ByteDance having made no attempt to find a suitor. TikTok "has become a symbol of the US-China tech rivalry; a flashpoint in the new Cold War for digital control," said Shweta Singh, an assistant professor of information systems at Warwick Business School in Britain. Trump had long supported a ban or divestment, but reversed his position and vowed to defend the platform -- which boasts almost two billion global users -- after coming to believe it helped him win young voters' support in the November election. The president announced an initial 75-day delay of the ban upon taking office. A second extension pushed the deadline to June 19. He said in May that a group of purchasers was ready to pay TikTok owner ByteDance "a lot of money" for the video-clip-sharing sensation's US operations. Trump knows that TikTok is "wildly popular" in the United States, White House spokeswoman Karoline Leavitt told reporters Thursday, when asked about the latest extension. "He also wants to protect Americans' data and privacy concerns on this app, and he believes we can do both things at the same time." The president is "just not motivated to do anything about TikTok," said independent analyst Rob Enderle. "Unless they get on his bad side, TikTok is probably going to be in pretty good shape." Tariff turmoil Trump said in April that China would have agreed to a deal on the sale of TikTok if it were not for a dispute over his tariffs on Beijing. ByteDance has confirmed talks with the US government, saying key matters needed to be resolved and that any deal would be "subject to approval under Chinese law." Possible solutions reportedly include seeing existing US investors in ByteDance roll over their stakes into a new independent global TikTok company. Additional US investors, including Oracle and private equity firm Blackstone, would be brought on to reduce ByteDance's share in the new TikTok. Much of TikTok's US activity is already housed on Oracle servers, and the company's chairman, Larry Ellison, is a longtime Trump ally. Uncertainty remains, particularly over what would happen to TikTok's valuable algorithm. "TikTok without its algorithm is like Harry Potter without his wand -- it's simply not as powerful," said Kelsey Chickering, principal analyst at Forrester. Despite the turmoil, TikTok has been continuing with business as usual. The platform on Monday introduced a new "Symphony" suite of generative artificial intelligence tools for advertisers to turn words or photos into video snippets for the platform.
Arab News
4 hours ago
- Arab News
Oil Updates — Brent futures down nearly $2 after US delays decision on direct Iran involvement
SINGAPORE: Brent crude prices pared gains from the previous session and fell nearly $2 on Friday after the White House delayed a decision on US involvement in the Israel-Iran conflict, but they were still poised for a third straight week in the black. Brent crude futures fell $1.89, or 2.4 percent, to $76.96 a barrel by 5:55 a.m. Saudi time. On a weekly basis, it was up 3.8 percent. The US West Texas Intermediate crude for July — which did not settle on Thursday as it was a US holiday and expires on Friday — was up 53 cents, or 0.7 percent, to $75.67. The more liquid WTI for August rose 0.2 percent, or 17 cents to $73.67. Prices jumped almost 3 percent on Thursday as Israel bombed nuclear targets in Iran, and Iran fired missiles and drones at Israel after hitting an Israeli hospital overnight. The week-old war between Israel and Iran showed no signs of either side backing down. Brent futures trimmed previous session gains following the White House's comments that President Donald Trump will decide whether the US will get involved in the Israel-Iran conflict in the next two weeks. 'Oil prices surged amid fears of increased US involvement in Israel's conflict with Iran. However, the White House press secretary later suggested there was still time for de-escalation,' said Phil Flynn, analyst at the Price Futures Group. Iran is the third-largest producer among members of the Organization of the Petroleum Exporting Countries, extracting about 3.3 million barrels per day of crude oil. About 18 million to 21 million bpd of oil and oil products move through the Strait of Hormuz along Iran's southern coast, and there is widespread concern the fighting could disrupt trade flows in a blow to supplies. 'The 'two-week deadline' is a tactic Trump has used in other key decisions. Often these deadlines expire without concrete action, ... which would see the crude oil price remain elevated and potentially build on recent gains,' said Tony Sycamore, analyst at IG.
