Kamala Harris, Donald Trump Proposals to End Tax on Tips Unlikely to Occur: UNLV Economist

Posted on: September 27, 2024, 01:49h. 

Last updated on: September 27, 2024, 01:49h.

Ed Silverstein @casinoorgedsilv Read More

Expertise: Legal, Tribal Gaming.

The two leading presidential candidates and their surrogates during Vegas campaign stops have voiced support for ending taxes on tips. But the similar proposals as outlined by Vice President Kamala Harris and former President Donald Trump remain unlikely to be implemented, according to UNLV economist Stephen M. Miller.

Ending taxes on tips is unlikely to occur as there are too many problems with implementation,” Miller, who is also director of research at UNLV’s Center for Business & Economic Research, told Casino.org on Thursday.

Miller cites such issues as:

• Employers take the opportunity to lower paid wages since tips are not taxed.
• Many tip workers are low income and may not pay the federal income tax in the first place.
• Some professions may look for methods to convert regular income into tip income, say consultants working for corporations.
• The unfairness to those not earning tip income.
• Loss of revenue with trillion dollar-plus deficits.

Both presidential candidates proposed the policy when campaigning in Nevada, which has a powerful Culinary Union,” Miller noted about the plan to end taxes on tips.

The Culinary Union, which represents hospitality workers, also has backed ending taxes on tips.

Unions’ Role

Miller also put into context some of the statements made by Acting Labor Secretary Julie Su during a recent visit to The Venetian in Las Vegas where she advocated for Harris and President Joe Biden, as well as labor unions. The Venetian has agreed to its first contract with the Culinary Union.

“By supporting the right to organize, we’re seeing workers gain more power in the workplace,” and that is helping to drive “a record recovery from the pandemic and it’s creating more prosperity all around,” Su said during last week’s appearance.

In response, Miller explained that after the COVID pandemic broke out, the federal government paid additional unemployment insurance payments of $600 per week.

“Workers took more time searching for jobs when unemployed, many seeking work in other sectors of the economy,” Miller said.

This precipitated a structural adjustment in the labor market that both workers and employers took some time to recognize. We see much more activity around unions declaring a strike if their demands are not met. Putting everything together and we can see a large shift in the bargaining positions of labor and management, moving toward labor and away from management. Real wages have been rising for over a year. Job benefits are improving in addition to pay.”

Immigrants in the Economy

While in Las Vegas, Su also praised the work done by immigrants.

“They make our economy run. They do the work in hotels like this and in restaurants,” she said.

“Low pay in the United States is high enough to support the immigrant and provide remittances back to their families at home where economic opportunities are much more scarce than in the United States,” Miller responded. “Las Vegas has more than their share of such low pay jobs.”

In addition, Su said the Biden administration believes “every job should be a good job, and preferably a union job.”

“Many immigrants who come to support their families back home do not have a significant skill set to offer on the job market,” Miller cautioned.

If we only offered ‘good’ jobs, these workers might be left out. Unions have been a declining share of the total workforce for decades. Although I noted a shift in bargaining power from employers to employees, that structural change will unlikely spur significant union membership in the near term.”