It’s sparking a debate.
In a recent private meeting with Senate Republicans, former President Donald Trump lightheartedly mentioned a new campaign idea that has gained popularity among caddies at his Mar-a-Lago golf course: eliminating taxes on tips earned by service workers. This proposal, enthusiastically received by senators in the room, is expected to be a cornerstone of Trump’s strategy as he seeks to win over working-class voters in key swing states like Nevada, Arizona, and Georgia in his upcoming rematch with President Joe Biden.
Despite the positive reception among some Republicans, the feasibility of this election-year proposal becoming actual policy remains uncertain. Several influential GOP members expressed skepticism, citing concerns about the growing national debt and the fairness of favoring tip-earners over other wage earners.
Representative Tim Burchett of Tennessee, a Trump ally, highlighted the grassroots support behind Trump’s tip tax exemption idea, describing it as savvy political maneuvering. He noted how Trump was inspired by a waitress during a previous meeting with House Republicans, underscoring the idea’s organic appeal.
Senator Ted Cruz of Texas, also a proponent, praised the proposal for potentially reshaping perceptions of Republicans as champions of working-class interests. However, other Republicans like Representative Chip Roy of Texas raised legal and practical concerns about treating different types of earners unequally under the tax code.
The potential economic impact of exempting tips from taxes is significant, with estimates suggesting it could reduce federal revenue by up to $250 billion over a decade, according to the Committee for a Responsible Federal Budget. Despite these financial implications, supporters argue that putting more money directly into the pockets of service workers could stimulate economic activity.
Trump’s campaign has embraced the idea as a key policy plank, contrasting it with Biden’s administration’s approach to tax policy and IRS enforcement. The proposal has garnered support from various quarters within the GOP, including vocal endorsements from Representatives Marjorie Taylor Greene of Georgia and Byron Donalds of Florida, who both have service industry backgrounds.
As the debate over tax policy continues, the fate of Trump’s tip tax exemption proposal hinges on its reception among lawmakers and voters leading up to the 2024 election.
