Trump’s Radical Plan – Changes COMING!

Former President Donald Trump, never one to shy away from bold proposals, made a striking promise during his June 9 rally in Las Vegas, Nevada: if re-elected, he will change the tax code to exempt tips earned by restaurant and hospitality workers from being considered taxable income.

Trump, known for his straight talk and populist rhetoric, addressed the crowd with his signature flair. “Tipped workers do a great job of service; you take care of people,” he said. He acknowledged that while changing the tax code for tips might not win universal popularity, “it’s right for the country” and is “something that is deserved.”

The current tax code treats tips as regular taxable income, which means hardworking servers, bartenders, and other tipped employees are taxed on every dollar they earn in tips. This proposal, however, would require congressional approval. Fortunately, Congress is scheduled to review the country’s tax policy in 2025 as Trump’s 2017 Tax Cuts and Jobs Act (TCJA) is set to expire. While the TCJA did not address tips directly, it made significant cuts to individual tax rates and the corporate tax rate, setting the stage for further tax reforms.

Trump reiterated his plan to change the tax code regarding tips in a post on Truth Social, where he lambasted President Joe Biden’s tax policies. He accused Biden of “trying to TAX more and more of their Tips” and criticized the administration’s hiring of “88,000 IRS Agents to collect!” He urged union members, leaders, workers, and non-union workers alike to support his initiative.

In stark contrast, President Joe Biden’s March tax proposal called for tax increases targeting big businesses and wealthy individuals with net worths exceeding $100 million. Biden suggested raising the corporate tax rate closer to its pre-Trump level. For tipped workers, Biden proposed phasing out the tipped minimum wage and raising the federal minimum wage, which many argue would place additional financial burdens on small businesses already struggling to recover from the pandemic.

According to data from the Internal Revenue Service (IRS), in tax year 2018, employers reported workers received over $38 billion in tips. However, the IRS acknowledges it struggles to ensure accurate tip reporting from workers and employers. In 2023, the IRS launched a new program aimed at encouraging voluntary compliance with tip reporting requirements.

Trump’s proposal highlights a critical issue: the often-overlooked burden of tip taxation on low-income workers. By removing tips from taxable income, Trump aims to boost the take-home pay of millions of Americans working in service industries. This move could significantly impact the livelihoods of those who rely heavily on tips to make ends meet.

The debate over how to handle tips in the tax code underscores broader ideological differences between Trump and Biden. While Biden’s approach focuses on increasing taxes on the wealthy and raising the minimum wage, Trump’s proposal is rooted in reducing the tax burden on workers and stimulating economic growth through tax relief.

As the 2024 election approaches, the issue of tip taxation is poised to become a significant talking point. Trump’s bold stance on this matter resonates with his broader economic philosophy: putting more money back into the pockets of American workers and reducing the reach of government taxation. Whether Congress will back such a proposal remains to be seen, but one thing is certain: Trump’s call to action will galvanize his supporters and ignite further debate on the best path forward for America’s economic future.