SAUNDERS: Hey Big Spender — Trump makes appeal to service industry
WASHINGTON
President Joe Biden has pledged to forgive chunks of America’s student loan debt in an obvious attempt to woo the votes of college graduates — it’s an odd benefit to bestow on earners who expect to make more money than those who have not benefitted from higher education.
Unless it’s an election year.
On Sunday, former President Donald Trump presented an alternative break, but not for college graduates. At a rally in Las Vegas, Trump announced he wanted to end taxes on tip income. “When I get to office,” Trump proclaimed, “we are going to not charge taxes on tips, people making tips.”
“You do a great job of service,” Trump told a crowd that braved the Nevada heat to cheer him on. “You take care of people. And I think it’s going to be something that really is deserved. So those people that have jobs in restaurants, whatever the job may be, a tipping job, we’re not going after for taxes anymore.”
Waitresses and waiters must be rejoicing.
In the think-tank-y fiscal-watchdog world, not so much.
I reached out to the nonpartisan Tax Foundation for a reaction. The group’s senior economist and research fellow Erica York replied, “Exempting a specific category of income from tax worsens the tax code by making it more complicated and more distortionary. It is not principled to provide carve outs in the tax code to different groups of people, in this case, exempting about $40 billion of income from tax each year.”
York countered that it would be better to use that money “to broadly improve the tax code for everyone.”
How much would workers save? York cited IRS data from 2018 that showed about 6.1 million taxpayers had reportable tip income — with an average amount of $6,249 per taxpayer.
What’s a union that endorses Democrats to do? In a statement, Culinary Union Local 226 Secretary-Treasurer Ted Pappageorge offered, “Relief is definitely needed for tip earners, but Nevada workers are smart enough to know the difference between real solutions and wild campaign promises from a convicted felon.”
Team Biden prefers to focus on “MAGAnomics.”
Biden White House Senior Deputy Press Secretary Andrew Bates sent out a memo Monday that hit Republicans for “plotting even more deficit-busting tax giveaways to major corporations” and “choosing corporate greed over hardworking Americans who play by the rules.”
I get it. Team Biden can’t exactly come out in favor of a tax-break for service workers after Trump proposed it first. That would make Trump look good.
The Trump campaign, meanwhile, did not respond to my queries about the deal. Would there be a cap on un-taxable tips? Was Trump referring to federal income taxes only, or would he also exempt tip income from Social Security and Medicare? Stay tuned.
How would Trump pay for the scheme — spending cuts or deficit spending?
Neither spending cuts nor deficit spending is good for a country that has amassed more than $34.5 trillion in debt — that’s more than $100,000 of red ink for every man, woman and child in America.
Or would Trump impose tariffs — which consumers would likely end up paying?
There is a clear winner in this contest — one candidate says he’ll cut student loan debt, the other guy says he’ll stop taxing tips. For the serving class, it’s like the biggest tip of all.
As a former waitress, I approve — if he pays for it.
Contact Review-Journal Washington columnist Debra J. Saunders at dsaunders@reviewjournal.com. Follow @debrajsaunders on X.
