In an act of breathtaking cynicism, Trump suddenly announced he supported eliminating income taxes on tips while he was in Nevada. His real purpose, of course, was to win the state, not to help workers. Not to be outdone, Harris followed suit about a week ago. Does this idea make sense, other than politically?
The answer to that question is an emphatic no. First of all, it would blow yet another large hole in the budget. Second, it would create an artificial distinction between two essentially identical forms of income that would cause employers and employees alike to game the system. All over America, service providers would see their wages slashed, and the demands for tax-free tips would become deafening, even possibly from doctors and lawyers. Finally, from the perspective of a consumer, the pressure to tip people who clearly don’t deserve it has become unbearable. This would make it a thousand times worse. Is that what we really want?