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Chicago Tribune
14 hours ago
- Business
- Chicago Tribune
Some US restaurants and servers oppose President Trump's ‘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.' 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. 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. 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. 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.
15 hours ago
- Business
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.' 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. 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. 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. 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.
The Hill
21 hours ago
- Business
- The Hill
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.' 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. 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. 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. 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.
Boston Globe
21 hours ago
- Business
- Boston Globe
Some US restaurants and servers oppose Republicans' ‘no tax on tips' budget proposal
'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.' Advertisement 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. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up 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. Advertisement 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. Advertisement 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. Advertisement '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.
Yahoo
11-06-2025
- Business
- Yahoo
How will hotel F&B fare against tariffs? CEOs weigh in.
This story was originally published on Hotel Dive. To receive daily news and insights, subscribe to our free daily Hotel Dive newsletter. President Donald Trump's tariffs are slated to impact the cost of many goods, and food and beverage products are no exception. For hospitality industry professionals, especially those with crossover in the F&B sectors, this causes concern. How will hotel restaurants source increasingly expensive food and beverage products without upcharging the guest? Will there even be as many guests to dine or drink with consumer confidence at a historic low? These are the questions hospitality pros are mulling over. As economic uncertainty mounts, Hotel Dive spoke with food and beverage industry leaders to gauge how tariffs will impact hotel restaurant operations and sales — and how the complementary relationship between travel and F&B could cause headaches for hotels. Tariffs on food and beverage products will undoubtedly raise prices for the American consumer, including hotel guests dining at on-property restaurants, experts shared. 'Many restaurant operators source as many domestic ingredients as they can, but it's simply not possible for U.S. farmers and ranchers to produce the volumes needed to support consumer demand.' Michelle Korsmo National Restaurant Association President and CEO 'The biggest concerns for restaurant operators are that tariffs will hike food and packaging costs and add uncertainty to managing availability, while pushing prices up for consumers,' National Restaurant Association President and CEO Michelle Korsmo told Hotel Dive. U.S. restaurants — including those operated at hotels — rely on global, interconnected supply chains to source fresh, year-round ingredients, many of which can't be grown or produced at the necessary quantities domestically, Korsmo shared. 'Many restaurant operators source as many domestic ingredients as they can, but it's simply not possible for U.S. farmers and ranchers to produce the volumes needed to support consumer demand,' she said. Any disruption to these supply chains by tariffs would increase restaurant operators' costs, per Korsmo. In an NRA letter sent to Trump, dated Feb. 18 and obtained and reviewed by Hotel Dive, Korsmo stated that a 25% tariff on food and beverage products from Mexico and Canada, for example, would cost America's restaurants $12.1 billion. No more than a month later, a 25% import tariff on goods from Mexico and Canada took effect on March 4, according to The Wall Street Journal. Canada responded by placing its own tariffs on $21 billion in U.S. imports, per the report. The Trump administration later suspended those tariffs on goods eligible for duty-free trade under the U.S.-Mexico-Canada agreement. While most agricultural products, food and alcohol qualify for a suspension of tariffs under USMCA, restaurant operators should check their own supply chains for specific products that may still be impacted, the Wisconsin Restaurant Association advised in a March statement following the tariff implementation. Korsmo provided similar guidance, telling Hotel Dive the first line of operator response should be to 'talk with their suppliers about where their products are sourced from and how new or increased tariffs will impact availability and cost.' U.S. imports, including food and beverage products, from all countries are subject to a baseline 10% tariff as of April 5, according to Supply Chain Dive. Due to Trump's tariffs, food prices are expected to rise 2.6% in the short term and stay 2.8% higher in the long run, according to an April study by The Budget Lab at Yale University. If food prices rise and restaurants' costs increase, menu prices will follow, Korsmo said. Brian Rosen, CEO of beverage private equity firm InvestBev, told Hotel Dive that a larger problem for U.S. hotels and restaurants than increasing F&B costs will be a significant decrease in guests, as traveler sentiment dips following recent government actions. 'The price at the hotel bar is irrelevant if there's no one there to drink,' he said, adding, 'there's a strong anti-American sentiment happening from a tourism standpoint, and because of the tariffs and political unrest, people are fearful to travel here.' Last month, the World Travel & Tourism Council reported that the U.S. is on track to lose $12.5 billion in international visitor spending in 2025 due to recent government actions. And hotel CEOs noted changes to travel demand and booking behavior in Q1 earnings. Las Vegas operators MGM Resorts and Caesars Entertainment, specifically, reported seeing fewer Canadian leisure travelers in the quarter. Less-obvious impacts could be felt by hotels if adjacent industries, like the food and beverage sectors, begin to struggle because of a lack of travelers, according to Rosen, noting the delicate ecosystem between travel, hotels and F&B. For example, hotel bars selling fewer beverages could result in a surplus, ultimately impacting brands' manufacturing and distribution strategies, Rosen explained. 'It creates a kind of a recession environment within the category — and that's all from one less person going to the bar,' he said, adding that decreased tourism impacts a beverage brand at every touch point. So what will happen in the year ahead as industries grapple with the near-term impacts of tariffs? Rosen said it will get worse before it gets better. Rosen predicts that public hospitality companies will report disappointing earnings results in the third and fourth quarters of this year if the summer travel season — usually the peak time for vacationers — does not perform as expected. Then, 'there will be too many loud voices pushing on the administration to back off' and it will 'force the administration to change policy.' 'There's going to be too much political collateral damage to keep tariffs at this level,' Rosen said. 'Once that translates to poll numbers, I think you'll see a pullback.' Hotel companies including Marriott International, Hyatt Hotels, Choice Hotels International and Wyndham Hotels & Resorts downgraded their 2025 RevPAR guidance in Q1 earnings reports, citing ongoing economic uncertainty. CoStar and Tourism Economics, meanwhile, downgraded their 2025 and 2026 growth projections for U.S. hotel top-line performance metrics earlier this month amid 'elevated macroeconomic concerns.' Sign in to access your portfolio
