Kamala Harris has yet to articulate a policy platform, opting instead to coast on the good vibes of anyone-but-Biden enthusiasm.

However, recently she unveiled the idea of eliminating taxes on tips at a Nevada campaign stop: 

When I am president, we will continue our fight for working families of America, including to raise the minimum wage and eliminate taxes on tips for service and hospitality workers.

If that sounds familiar, it’s because she ripped it straight from President Trump’s stump speech.

News outlets are taking notice:

Washington Post: “Harris backs ending taxes on tips, weeks after Trump made similar pledge”

USA Today: “Kamala Harris joins Donald Trump’s call to eliminate taxes on tips”

Politico Playbook covered Harris’s pledge as well, saying it “triggered” Trump.

The New York Times neglected to include in its headline ”Rallying in Las Vegas, Harris Pledges to End Federal Taxes on Tips” that this was Trump’s idea, but they snuck that into the subheading, adding that this was “mirroring a proposal made by former President Donald J. Trump.”

President Trump called her out on social media:

https://truthsocial.com/@realDonaldTrump/posts/112940937623275423

Honeymoon” period is ENDING, and is starting to get hammered in the Polls, just copied my NO TAXES ON TIPS Policy. The difference is, she won’t do it, she just wants it for Political Purposes! This was a TRUMP idea – She has no ideas, she can only steal from me. Remember, Kamala has proposed the LARGEST TAX INCREASE IN HISTORY – It won’t happen. MAKE AMERICA GREAT AGAIN!!!

After President Trump introduced the idea, social media lit up, as Meagan Dean at Americans for Tax Reform noted:

In one popular post, X user @nicksortor displayed an image of his restaurant receipt with a $100 tip on top of a $25 check:

Similar proposals enjoy bipartisan support. In Congress, Republicans Senator Ted Cruz of Texas and Florida Representative Byron Donalds introduced the No Tax on Tips Act to create a full above-the-line deduction for income from cash tips, including physical currency, debit or credit card payments, or checks exempt. Nevada’s two Democratic senators, Jacky Rosen and Catherine Cortez Masto, jumped on board noting in a statement:

Nevada has a higher percentage of tipped workers than any other state, and getting rid of the federal income tax on tips would deliver immediate financial relief for service and hospitality staff across our state who are working harder than ever while getting squeezed by rising costs.

A separate Republican-led bill, the Tax-Free Tips Act of 2024, would exempt tips from income and payroll taxes.

Is eliminating taxes on tips a good idea?

This is where this policy idea gets sticky.

Alex Muresiano of the Tax Foundation raised several concerns with the policy. He explained it would: 

  1. Affect too few workers because tipped workers represent a small share of the workforce: “…according to an analysis from Ernie Tedeschi at the Yale Budget Lab, only 2.5 percent of the workforce work in tipped occupations, and only 5 percent of workers in the bottom 25 percent of earners do. As such, the policy would leave the vast majority of low- and middle-income earners out of the loop.
  2. Be ineffective since many workers don’t have much or any tax liability: “some tip income earners already do not pay personal income taxes, as some (mostly part-time) tipped workers earn less than the standard deduction, and others benefit from the earned income tax credit (EITC) and/or child tax credit (CTC) to the extent that they wipe out any federal income tax liability.”
  3. Create a perverse incentive that could balloon the cost: “By making one type of income (tips) exempt from income tax while other types of income (most importantly, wages) remain taxable, the proposal would make more employees and businesses interested in moving from full wages to a tip-based payment approach…This kind of behavioral response makes it difficult to estimate the cost of the no-tax-on-tips proposal. A simple analysis of tipped income suggests a lower bound cost of around $107 billion over 10 years.”

Limiting the industries of workers that could qualify might be a way to prevent workers in other industries or higher-earning professionals from changing their compensation models from wages to tips and game the system.

Even if taxes on tips are eliminated, all paycheck earners face a massive tax hike if the 2017 Trump-era tax cuts are allowed to expire at the end of 2025. 

President Trump is committed to both extending and expanding the tax cuts. Kamala Harris is adamant about allowing many of them to expire and hiking taxes on businesses. 

Bottom Line

Copying President Trump’s idea to eliminate a tax on tips won’t convince Americans that Kamala Harris is a fighter for lower taxes. She should come up with an original idea of her own.