President Joe Biden has backed the idea of eliminating the tip tax for service providers, the White House said Monday, two days after Kamala Harris was accused of stealing Donald Trump’s campaign promise and months after his own administration was criticized for taking a tougher stance on servers and others who failed to report tips.
The policy is very popular among voters and could determine the outcome of elections in key battleground states such as Nevada.
“Absolutely,” White House press secretary Karine Jean-Pierre said when asked whether Biden would sign legislation ending the tip tax.
“This is something the president supports. He supports eliminating taxes on tips for service and hospitality workers, while also raising the minimum wage and preventing the wealthy from abusing the system.”
The issue is now the subject of a tug-of-war between election candidates.
White House press secretary Karine Jean-Pierre said President Joe Biden supported Kamala Harris’ proposal to eliminate the tip tax (months after Donald Trump proposed the policy)
Trump has been campaigning on this promise since June, when he said a waitress in Nevada told him the government was taking too much of her tips.
On Saturday, a day after the Culinary Workers Union endorsed her, Harris vowed to do the same if elected.
“I promise everyone here that when I’m president, we’ll continue to stand up for working families, including by raising the minimum wage and eliminating the tip tax for service and hospitality workers,” she said.
Trump immediately accused her of stealing the policy.
“The difference is she won’t do it, she just wants to do it for political purposes!” he posted on his Truth Social website, using his idiosyncratic style of capitalization.
“This was TRUMP’s idea. She has no ideas, all she can do is steal from me.”
The proposal has proven popular with voters, and it is now one of the few areas where the two candidates agree.
According to the nonpartisan Committee for a Responsible Federal Budget, Harris’ proposal could create a budget gap of up to $200 billion over 10 years.
But Jean-Pierre struggled to explain why the government was only considering the issue now, after three and a half years.
MAGA Inc., a pro-Trump Super PAC, is offering stickers to promote Donald Trump’s new promise to increase the tip tax after diners shared receipts on which they had written in support of the policy to help workers who rely on tips
Vice President Kamala Harris presented her policy proposal at the University of Nevada on Saturday, drawing Trump’s ire
She said she could not give a timeline for the thinking behind the announcement.
“There are things that the president and this vice president have done over the last three and a half years to help hardworking people that the Republicans in Congress have opposed,” she said.
Tips are classified as taxable income, and the W-2 form includes a box for “wages, tips, and other compensation.” However, the IRS has long said it has a hard time getting employees and employers to submit accurate information.
Last year, a new mechanism was proposed to improve compliance.
It would allow employers to sign up to a voluntary scheme that uses their point of sale computer systems to collect tip data. Employers would then submit an annual report, reducing the chance of staff or businesses facing a dreaded audit.
In some quarters the proposals were seen as a heavy-handed crackdown.
“The proposed SITCA program is designed to take advantage of advances in point-of-sale systems, time and attendance systems, and electronic payment methods to enhance tip reporting compliance,” the IRS said in announcing the proposal.
“The proposed program would also reduce administrative burdens on taxpayers and the IRS and provide taxpayers with greater transparency and certainty.”
