Some US restaurants and servers oppose Republicans' 'no tax on tips' budget proposal
Some segments of the U.S. 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 restaurant 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 U.S. 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 U.S. 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 U.S. 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% of U.S. 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% 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
The Independent
an hour ago
- The Independent
Billionaire Mark Walter, set to own controlling stake in Lakers, built fortune in investing
The billionaire slated to take over the controlling interest in the Los Angeles Lakers has built a career leading businesses investing in everything from sports franchises to artificial intelligence. Mark Walter is CEO of the global investment and advisory company Guggenheim Partners, which is estimated to have more than $325 billion in assets. He's also co-founder and CEO of holding company TWG Global. Forbes estimates Walter's net worth is $6.1 billion. The publication ranked him at No. 216 on its Forbes 400 list last year. Walter received an undergraduate degree in business administration from Creighton University and a law degree from Northwestern University, but ultimately chose business over a career in law. In the mid-1990s, he co-founded Liberty Hampshire, an investment management firm in Chicago. That business became part of Guggenheim Partners, which Walter co-founded in the late 1990s. In addition to Guggenheim, Walter co-founded TWG Global with film producer Thomas Tull. The company holds a portfolio of finance and insurance sector companies, including Guggenheim Investments, Guggenheim Securities, Group 1001 Insurance and Delaware Life. It also includes aerospace and defense technology company Shield AI. Last month, TWG Global announced a partnership with Palantir Technologies and Elon Musk's AI company, xAI, maker of Grok, aimed at developing artificial intelligence for use in the financial services industry. TWG Global also includes investments in sports, media and entertainment franchises, such as the controlling interest in the Los Angeles Dodgers, Premier League club Chelsea, the Professional Women's Hockey League and — through TWG Motorsports — ownership of several auto racing teams including Cadillac Formula 1. Beyond business, Walter and his wife, Kimbra, have founded or contributed to various philanthropic organizations, including the Los Angeles Dodgers Foundation, the Academy Group, Chicago Beyond and OneGoal.
The Guardian
an hour ago
- The Guardian
The $10bn LA Lakers sale proves sports have outgrown billionaires
The sale of the Los Angeles Lakers is many things. First of all, it is a record. The glitziest team in basketball is changing hands at a valuation of $10bn, the biggest ever for a sports franchise. Second, it is probably an excellent deal for the buyer, even at that astonishing valuation. And third, the shift in majority ownership from the Buss family to an investment group led by Los Angeles Dodgers owner Mark Walter, is something else: inevitable. Sports teams are an eye-watering asset class. Not only does owning one confer countless perks and the kind of societal status that most money can't even buy, but team valuations in the major North American sports have been on a steep upslope for decades. The sale of the Lakers represents a new peak and is also the latest data point that illustrates a new fact about sports ownership. The best properties have become too valuable an asset class for people like Jeanie Buss to control them. Buss' father, Jerry, bought the team in 1979, and the Lakers have since then operated like one of the world's largest family businesses. The Lakers are by far the biggest source of the Buss family's wealth, and as ESPN reported on Thursday, the team has traditionally used its own revenues to pay its expenses. Its golden goose is an enormous local television deal with the LA cable provider Spectrum. The cable bundle is dying, however, and these days the biggest sports teams are increasingly owned not by wealthy individuals and families but by consortiums of deep-pocketed investors and institutions. The Lakers had already moved in this direction; the Buss family sold a quarter stake in the team to a group led by Walter in 2021. That same group – with Walter as the frontman, but by no means doing it alone – took control of the Dodgers in 2012 and later bought control of the WNBA's Los Angeles Sparks. Blue-chip sports properties like the Lakers are now too big for even most billionaires to just reach into their pocket and by all alone. For that reason, leagues have gradually made it much easier for institutional investors to buy stakes in teams. (The NFL, with limits, has swung open the door to private equity.) The corollary to that trend is that when a longtime owner like Jeanie Buss has buyers lined up with enough liquidity to secure her family fortune in cash, rather than ownership of a team, she's likely to jump at it. The Lakers' new owners are likely to do very well on their investment. The decline of cable is a major threat to professional sports teams, and some smaller-market clubs in the NBA, NHL and Major League Baseball have taken substantial cash flow hits as regional carriers have faded. But the Lakers are so entwined with one of the world's largest cities that to bet against their continued growth is to bet against the future popularity of basketball, the city of Los Angeles and live entertainment altogether. Angelenos will not stop buying Lakers tickets and, even more critically, will not stop happily paying to watch 82 games per year, whether they're doing that on a streamer or traditional TV. The Lakers are too big to fail, and some time down the line, someone will value them at well more than $10bn. The sale will probably be good for Lakers fans, though they are not the priority in any transaction of this type. Walter's group has done wonders with the Dodgers, seizing on the franchise's natural advantages – a rabid fanbase and a location players want to play in – and turned the team into the most consistent winner in baseball. It is harder to flex a financial advantage in the NBA than in salary cap-less MLB, but Walter's Dodgers have become the team with the best reputation among ballplayers. Not that the Lakers have a hard time attracting stars, but one could imagine them attracting even more of the players they covet. At the end of the day, isn't that kind of product what fans want to see? While this will all likely go fine for the Lakers, the shift in ownership models does raise questions about what will become of sports teams that don't defy gravity by their very existence. Plenty of individual club owners have been massive flops who have earned the endless scorn of their clubs' fans. But the fact of having one highly visible, specific owner has at least rendered a version of accountability. After all, it's easier for Manchester United fans to chant 'Glazers out!' than it would be to chant 'shadowy consortium of institutional investors out!' A move toward large groups of investors controlling iconic teams will make it easier for individual actors to milk them for cash without facing the kind of public shaming that has long been possible for teams with more identifiable villains in the owner's suite. The Lakers are big enough and successful enough that this dynamic might never come to a head. Most teams can't say the same.
Telegraph
an hour ago
- Telegraph
Come on Whoopi, the US may not be fun but you're hardly in danger of being flogged
Whoopsi Goldberg. When will she learn that acting and activism are two very different skill sets? I'm not sure we want more of the former from her but we want absolutely none of the latter. Her latest toweringly stupid prime-time pronouncement is that for black people, living in the US is as bad as living in Iran. Appearing on The View, a topical panel show, Oscar winner Goldberg was enraged when her co-host Alyssa Farah Griffin stated, perfectly reasonably, that 'it's very different to live in the United States in 2025 than it is to live in Iran'. 'Not if you're black,' snapped Goldberg, who then proceeded to shout the other woman down, wildly claiming time and again that the prevailing culture in the democratic US is in lockstep with the systematic oppression imposed by the Iranian theocracy. We know you're a lefty. We know you hate Trump. But really? 'Let's just remember, too, the Iranians literally throw gay people off of buildings. They don't adhere to basic human rights,' pointed out Griffin, an Arab-American. This cut no ice with Goldberg, who by now had clambered onto her bandwagon and refused to concede a single point as it would represent an unthinkable climbdown. 'Let's not do that,' she countered crossly, 'because if we start with that, we have been known in this country to tie gay folks to the car.' Her false equivalence was as ugly as it was ignorant. Call me a bigot, but conflating state-sanctioned execution with illegal acts of murderous criminality is mortifying, stupid and dangerous. In a new report presented to the Geneva-based Human Rights Council on Wednesday, UN Secretary-General Antonio Guterres said that Iran was executing people at 'an alarming rate'. At least 975 people received capital punishment in 2024, an increase on the estimated 834 in 2023 and the highest rate of executions since 2015. Flogging, torture and amputation are accepted forms of punishment in a country where the security forces act with impunity and women are 'disappeared' for refusing to wear the 'correct' veil. But Goldberg, who is worth an estimated £45 million, appeared to have no intention of listening – or allowing the audience to hear – any point of view other than her own. Even when Griffin pointed to the actress's clothing and argued that in Iran she wouldn't be allowed to walk around with her hair and legs showing, Goldberg predictably dragged the debate – such as it was – back to her specialist subject of race relations in the US. A worthy topic – but this was a programme focusing on Iran. 'Nobody wants to diminish the very real problems we have in our country,' responded Griffin carefully (to her credit, she didn't just reach over and turn off Goldberg's mic). 'But there are places far darker than our country.' She's right. But Goldberg wasn't interested. Her empathy doesn't appear to extend beyond her home turf. Or beyond colour. In 2022, she was suspended from the selfsame show for 'wrong and hurtful comments' after she asserted the annihilation of six million Jews in the Holocaust wasn't about race because 'these are two white groups of people'. Wow. You'd think Goldberg might have learnt something – anything. But no. She inhabits a myopic world of privilege in which her opinions are the only opinions – and if you're not with her, you are against her. The sorry truth is that now Hollywood no longer comes calling, she's plying her trade as a TV loudmouth. She doesn't need the money, but she clearly craves the attention – a deluded egotistical actress clinging to the excruciating belief that she's still the star of the show.
