One of Vice President Kamala Harris’s many policy reversals (aka flip-flops) lately is taxing tips.

After President Trump announced he would eliminate taxes on tips earned by service industry workers two months ago, Harris co-opted the idea this week and is passing it off as her own. 

Now, even the veep’s boss, President Joe Biden, is on the ax-the-tips-tax-tax bandwagon. However, their change of heart seems disingenuous as it is purely for politics. 

Before Harris and Biden were for eliminating taxes on tips, they were using the IRS to crack down on tips.

What happened

On Sunday, Kamala Harris copycatted President Trump’s policy idea to eliminate taxes on tips.

Hours later, Biden-Harris White House Press Secretary confirmed President Biden’s support for the idea and willingness to sign congressional legislation if passed:

“Absolutely. This is something that the president supports. He supports eliminating taxes on tips for service and hospitality workers, raising the minimum wage, and making sure the wealthy don’t game the system.”

This is an about-face of the administration’s treatment of tips-earning workers. 

Early last year, the Biden-Harris Internal Revenue Service (IRS) announced a new tip reporting program to ramp up tax collection of tipped income. Called the Service Industry Tip Compliance Agreement (SITCA) program, this is a voluntary tip reporting program between the IRS and employers in various service industries.

According to the IRS, the SITCA “is designed to take advantage of advancements in point-of-sale, time and attendance systems, and electronic payment settlement methods to improve tip reporting compliance.”

The IRS claimed this was a move for transparency and efficiency to “decrease taxpayer and IRS administrative burdens.” 

In reality, this is an attempt to crack down on underreported tips. By collecting more data from employers on the tipped income earned by employees, they can verify what workers report to the IRS.

Since so many transactions are digital, receipts can provide a good paper trail for the IRS to follow. Working-class and middle-class workers will be affected.

Tipped workers are required to pay federal income and payroll taxes. We have a responsibility to pay taxes. It’s positive when policymakers aim to reduce or eliminate taxes for taxpayers. 

However, the BIden-Harris Administration has prioritized ramping up tax enforcement and promising to raise taxes on Americans. Service sector workers join gig workers and small businesses in facing new IRS scrutiny. 

This administration believes that it can raise funds for its radical climate agenda and other massive spending agenda items by closing the tax gap and cracking down on tax cheats.

The misleading Inflation Reduction Act, which turns two years old this week, was never meant to reduce inflation but rather to usher in the Biden-Harris green agenda on the backs of taxpayers. It granted the IRS $80 billion of new funding to boost IRS enforcement funding. Small businesses and households earning below $400,000 were not supposed to be targeted. Yet, here we are.

Bottom Line

Kamala Harris and Joe Biden’s embrace of Trump’s idea to eliminate taxes on tips is an unbelievable flip-flop. Unless the IRS lays off servers, gig workers, and small businesses, no one should believe Biden and Harris are looking out for the pockets of poor and working-class Americans.