Proposals to end federal income taxes on tips

MPR News with Angela Davis

Cutting taxes on tips may sound like a good idea, but many economists don’t love it.

Earlier this summer, former President Trump proposed eliminating federal taxes on tips. A few weeks ago, Vice President Harris said if elected, she would also seek to end taxes on tipped income for service and hospitality workers like servers, bartenders and barbers.

While tips are considered taxable income, cash tips for restaurant workers and others have gone largely unreported. But, that has changed with the proliferation of credit cards and mobile payment options.

On Tuesday, MPR News host Angela Davis and her guests talk about why the idea may not help and could actually hurt most tipped workers.

Guests:

• Chris Farrell, MPR’s senior economics contributor.




• Timothy Taylor, economist and managing editor of the “Journal of Economic Perspectives,” a quarterly academic journal produced at Macalester College and published by the American Economic Association.