LAS VEGAS — A key state Democrat has taken up Donald Trump’s idea of ”no tip tax,” as Rep. Steven Horsford introduced legislation that would give a federal tax break to tipped workers earning less than $112,500 a year.
The Income Protection and Support Act, or TIPS Act, provides tax relief to eligible workers in the cosmetology, hotel and restaurant industries, parking attendants and janitorial service employees.
Asked whether the provisions would apply to Nevada casino dealers — or prostitutes in the Silver State’s legal brothels — a Horsford spokesman told the Post: “Hospitality is a very broad category that would include many workers in Nevada.”
Horsford said his bill would also eliminate the “minimum wage” for tipped workers, requiring employers to pay both the federal minimum wage and pass on tips. Nevada is one of seven states where tipped workers receive the state minimum wage — which rose to $12 an hour in July — plus tips.
The lawmaker, who chairs the influential Congressional Black Caucus, said at a news conference Tuesday that his measure would benefit the economically disadvantaged.
“A disproportionate number of the 6 million tipped workers, who are women and people of color, make just $2.13 an hour, which is truly a poverty wage at a time when families and workers are trying to keep up with the cost of living,” Horsford said. “I have led the charge to close the racial wealth gap, and we can no longer tolerate inequities in the wages of tipped workers.”
Not everyone agrees with the Democrat’s argument. Rep. Kevin Kiley (R-Calif.) chaired a House Education and Workforce Subcommittee hearing on tipping on Wednesday, where he defended the status quo.
“The current system gives tipped workers the opportunity to thrive, and it not only helps them, it helps the restaurants and small businesses that employ them,” Kiley said.
Kiley also pointed to a National Restaurant Association study that found the median wage for a tipped worker is $27 an hour, which, as the survey points out, is well above the federal minimum wage.
Meanwhile, more than 100 Michigan servers and bartenders rallied outside the state capitol Wednesday to oppose the state’s proposed minimum wage change, which would eliminate the lower minimum wage. Local news reports cited workers as saying the state’s proposed minimum wage hike for tipped employees could raise restaurant prices and actually reduce their income.
Saru Jayaraman, a labor advocate who leads One Fair Wage, a group that advocates for the elimination of a lower minimum wage for tipped workers, said at a House hearing that the seven states that require a full minimum wage for tipped workers show that tips are “the same as or higher than the 43 states where the minimum wage for tipped workers is below the minimum wage.”
The attorney, who also directs the Food Labor Research Center at the University of California, Berkeley, had previously supported Horsford’s bill, which also received support from Culinary Workers Local 226, the Las Vegas union representing thousands of tipped workers.
Horsford, in a November re-election battle against former North Las Vegas Mayor John Lee for the 4th Congressional District seat, previously co-sponsored a Republican tax-free tip bill launched after Trump declared in Las Vegas on June 9 that his next administration would not tax tip income.
“These workers should not be taxed twice, once on their wages and then again on their tips,” said the incumbent, who is seeking a fifth term in the House.
Under the terms of the Horsford bill, workers would be entitled to a deduction “equivalent to the amount of eligible tips received” in a tax year. “Eligible tips” are those received from an unrelated party that does not own an interest in the employing business and that arise during the worker’s regular employment, where tipping is customary.
A reading of the bill’s text suggests that tips would continue to be subject to FICA taxes, which fund Social Security and Medicare.
In a previous interview with the Post, Horsford’s Republican challenger, Lee — a former Democrat — hailed the “no tip tax” proposal as “terrific,” but said the credit doesn’t belong to Horsford.
“It wasn’t his idea,” he said.
