#Politics

Donald Trump calls for ending taxes on tips, drawing mixed reaction from Republicans



WASHINGTON — In his private meeting with Senate Republicans last week, former President Donald Trump joked that a new campaign pitch has made him very popular with the caddies at his golf course near Mar-a-Lago: Ending taxes on money earned from tips.     

It’s an idea that was cheered in the room of senators and one that Trump will likely return to as he courts working-class voters in swing states with large service industries like Nevada, Arizona and Georgia in his rematch this fall with President Joe Biden.

But it’s unclear whether the election-year talking point will materialize as a serious policy plan on Capitol Hill. Several influential Republicans told NBC News they’re skeptical of the idea, citing the rising national debt and questioning whether it would be fair to earners who don’t make tips.

Trump also mentioned his desire to end taxes on tips during an earlier meeting with House Republicans, said Rep. Tim Burchett, R-Tenn, adding that the former president recounted to lawmakers how a waitress gave him the idea.

“This thing has really just organically caught fire,” Burchett, a Trump ally, told NBC News on Monday, calling Trump’s proposal “smart politics.”

Three GOP senators who listened to Trump’s remarks in a separate closed-door meeting mentioned his tax-and-tips pitch, unprompted, as they left last week. Sen. Ted Cruz, R-Texas, a one-time Trump rival, said the idea is “terrific” and could shift voter perceptions of the parties.

“For someone that’s working as a waiter or waitress or someone that’s working as a taxi cab driver, or someone who’s working as a bellhop at a hotel, there are a lot of people who are starting to climb the economic ladder who rely on tips,” said Cruz, who faces his own re-election battle this year in Texas. “The caricature of Republicans is that Republicans were the party of the rich and Democrats are the party of the poor and the working class.”

Other Republicans are skeptical of the fledgling proposal.

“I don’t know about just making a unilateral decision about tips, versus focusing on workers generally,” Rep. Chip Roy, R-Texas, an influential House conservative, said in an interview. “Like why would you favor tip-earners versus another person who makes similar wages? … That might even pose some legal questions in terms of how you’re treating one person versus another.”

“The idea of making sure that hard working families are not being burdened by taxes? Good. Differentiating between tips versus non-tip, not sure I fully buy that,” Roy said.

Rep. Vern Buchanan, R-Fla., the vice chair of the House’s tax-writing Ways & Means Committee, also said he’s not sold on the idea of reclassifying how tips are taxed, citing the growing national debt.

“You just gotta be careful with it. We’re running these trillion-dollar deficits. Gotta be careful with all of this. I want to be sensitive because they work hard,” Buchanan said. “And obviously a big part of their earnings is tips. All these programs sound good, everybody like to pay less taxes. But we got to pay the bills.”

According to the IRS, all cash and non-cash tips are subject to federal income taxes. It means that Congress would need to step in and pass a law to exempt tips from being taxed in the future. Major portions of the Trump tax cuts are expiring at the end of 2025 and, if he’s elected, Trump’s idea regarding tips could land on the menu for policymakers looking to rewrite the tax code.

Such a move would have significant impacts on the debt.

The Committee for a Responsible Federal Budget, a research group that advocates for cutting red ink, estimated in a paper Sunday that exempting tips from income and payroll taxes could cut federal revenue by as much as $250 billion over 10 years.

Asked if the campaign has policy details or a cost estimate, Trump spokeswoman Karoline Leavitt said in an email: “President Trump intends to ask Congress to eliminate taxes on tips to put more money back in the pockets of hardworking service workers. On the contrary, Joe Biden has aggressively stepped up the IRS going after tip workers.” (The White House says the extra IRS funds Biden secured are about improving customer service and targeting wealthy tax evaders, not low- or middle-income earners.)

Lael Brainard, a top Biden White House adviser, responded cautiously when asked about Trump’s tip idea, citing the Hatch Act prohibitions on political activity by West Wing officials.

Broadly, Brainard told reporters in a call last week that Biden has “fought for real solutions that actually address workers’ legitimate need for fair wages” and has better ideas for Nevada wage earners — including a higher minimum wage and overtime protections.

“So our view is that the meaningful set of policy changes that would really lift the living standards of Nevada workers and workers all around the country would be to raise the minimum wage and eliminate the tipped minimum wage leading to $6,000 more in income per year,” Brainard said.

A day after his visit to Capitol Hill, as he celebrated his 78th birthday with supporters at the West Palm Beach Convention Center, Trump retold the story of the tips proposal in greater detail. He was at a restaurant in Las Vegas and asked a waitress what it would take to win her vote. She told him to nix taxes on tips, Trump said. To spread the word, the former president then instructed his supporters to write on their restaurant receipts: “Vote for Trump because there’s no tax on tips.”

One Trump loyalist, Rep. Marjorie Taylor Greene, R-Ga., did just that, tweeting a photo of a receipt with the message “VOTE TRUMP! no tax on tips!!”

Rep. Byron Donalds, R-Fla., another Trump ally, is also cheering the idea.

“Listen, as a former waiter — I waited tables in college, and a little bit after college — I think we should definitely do that,” Donalds said. “Waiters, waitresses, service staff — they work hard every day. They work hard and they’re not millionaires. To go after them like that doesn’t make any sense to me.”

And Sen. Kevin Cramer, R-N.D., who relayed Trump’s story about his caddies, also sees the tips proposal as a way to win over voters: “The tips issue is good for Trump and Republicans. Working class voters have not been this pro-Republican since Reagan,” Cramer said in a brief interview Monday.

Burchett said the economic impact would be positive despite the red ink that the policy could create.

“I’m of the belief that these folks aren’t going to stuff that in a mattress or bury it in a mason jar in your backyard. They’re going to put it back in the economy pretty quick,” he said. “I would rather Americans invest that rather than the federal government steal it.”



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