Some interesting points: ~40% of tipped workers don't make enough to get taxed anyway, no tax on tips would actually advantage better paid workers like casino dealers who don't need the help. NToT is described as a campaign to distract from minimum wage increase initiatives.
Beware the logical fallacy. "A implies B" does not mean that "not A implies not B".
Workers who earn too little to pay taxes (A) will not benefit from a tax cut (B).
But workers who earn enough (not A) may still not benefit (not B), for example because their employer indirectly pockets the difference. That is actually being argued in the article.
So this is indeed the appropriate way of formulating the statement: at least 40% of workers will demonstrably not benefit from this.
Well, to be fair, the IRS considers the average tip to be 8% for taxation purposes.
The whole "I get taxed whether you tip me or not", "I have to pay to serve you if you don't tip"? No, not so much. If you can show (there's even a hugely burdensome IRS form that might take as much as 3-4 minutes a month for cash tips) that you earned less than that 8% average, then that's what you get taxed. But most servers don't want to fill that form out, because they get ... rather more than that, and are being undertaxed already.
Sure, but TFA makes clear that any benefit to workers from tax-free tips is laughable compared to the numbers of times the restaurant lobby has fucked them over, by repeatedly killing attempts to keep wages low. It's not even throwing workers scraps, it's more like throwing them crumbs.
They may not pay any income taxes, but they almost certainly pay FICA taxes. If the NToT includes FICA, they would be better off. However, I still think it is terrible idea to advantage some employment classes and means of compensation over others like that.
Yes, creating special exceptions like this is an awful idea.
More carve-outs complicating the tax code and pandering to specific constituents is a bad thing.
It reminds me of listening to a story of how day care business owner-operators are not required by law to contribute to Social Security, don’t, and are then screwed at the end of their life because they don’t have any way to retire.
I live in California and this isn't true here. All restaurant workers receive at least minimum wage before tips. In my city, that's $19/hour with health insurance.
Of course, you're still expected to leave a tip and suggested minimum is now 20%, plus even McDonalds is charging $15 for a 4 oz burger, so I rarely go out to eat at places that expect a tip anymore.
I'm not sure why they specifically should be tax exempt though. Cash tips often were, practically speaking, so a lot of tax evasion was happening, but it still seems odd to single them out.
Don't forget to reduce your tips by the percentage they were previously being taxed, since it is all charity anyway.
Hopefully this becomes another straw that will eventually break the camels back and we get rid of tipping all together. Every restaurant in the world does not need tips to survive, except for the ones in the US.
This is going to expand tipping dramatically. I don't understand how you could have any optimism that tipping will go away after this is passed.
Businesses are going to work hard to blur the line between a tip and a required payment so that they can call their income a tip while customers think they're obligated to pay it.
Nah. Profitability for the business would be higher without tips. I take x% of gross income as profit. No tips means I can charge the customer more, which means a higher gross income, which means more profit. When tipping is involved, the money slips through without allowing the business to take its cut. Good for the server, but not good for the business.
However, as theoretically great as it sounds, you are ultimately beholden to what the customer wants. There is good reason why every restaurant that has tried a "no tips" policy has failed. Nobody shows up to dine. They go somewhere else where they can tip instead. Regular people actually enjoy tipping, as hard as it may be to believe for those who are staring at screens rather than enjoying the ambiance of a restaurant.
Fascinating how America’s response to people being sick of having to tip on everything, tips being little more than a tax on generosity, was to make this most hated form of remuneration even more advantageous.
Agreed 100%. I will enjoy the creative financial engineering that likely comes with this policy, as we attempt to classify more and more things as gratuity, to escape the reach of the IRS.
> But, when three members of the group came forward to testify, all expressed support for the Tipped Workers Protection Act and opposition to the One Fair Wage Act, which they portrayed as an effort to steal their tips
This article is missing a real issue here by trying to make the story all about the employers. Many workers like the tip system because it creates inequality among the restaurant workers. Good servers can earn a lot more money than what they’d earn if every server were paid the same, fair wage.
My mom used to work at a furniture store as a floor sales associate on commission. She would regularly clear $120,000/year (this was 15 years ago, so like $180,000 today). A generous wage for the job at the time probably would’ve been $50,000 or so. She would’ve fought such a policy tooth and nail.
Is the definition of a good server in this case one who can serve more tables than others in the same amount of time? In most places tips are mandatory and % does not depend much on anything unless someone messed up.
Commission on sales is very different from restaurant tips.
Tips, at least in the US has never been mandatory but it is an immense social pressure. Besides, my understanding is that tipping % is arbitrary anyway - there have been studies that show good looking people get more tips.
The final cost of the bill matters more than anything. A server at a higher-end restaurant where the bills regularly exceed hundreds of dollars will earn more in tips serving fewer tables than a server that works at a cheaper casual-chain restaurant (IHOP, Applebees, etc).
More so than tables per unit time, it's dollars per unit time. When I was a server, the usual metric of how well you performed on a given shift was the total of your bills ("how much you sold"). The best servers were good at encouraging parties to spend on the things they were on the fence about: the appetizer, the second drink, the dessert. Even with the volatility of individual tipping decisions, getting your tables to order more increases the EV of your total tips.
I don't think you read the article. It explains that those three members who came forward were not actually servers, but restaurant management & owners. Additionally, the article is not missing this issue you call out. The author goes so far as to discuss Casino dealers in Vegas who would stand to gain the most out of this sales tax proposal (sales commissions in your anecdote do not count as tips). But primarily, the author is concerned about the 1/3 of tipped workers who do not pay federal income tax and are at risk of falling below the poverty line due to reductions in their minimum wage.
Servers also know that if tips are outlawed, they will never make that much money again.
It's possible for high end bartenders or servers to make over $500 a night in tips. The whiplash of moving into true salary or hourly work is an open secret in the high end service industry. This is why you see some old waiters and bartenders hanging around, when some people consider the service industry "entry level."
This is also why I don't like to listen to them complain about their jobs lol. The difficulty of work to income ratio is unique to this industry.
Yeah, if you're lucky you can make a huge amount of money in tips - if you're the right server on the right night at the right place and get the right customers.
You can also, if you're not lucky, barely make anything in tips on minimal hours per week and then have your employer steal half your tips anyway, and then you're basically clearing $4.50/hr for 12 hours a week and probably ending up on food stamps until republicans eliminate those entirely.
Thing is, I've known freelancers who make great money, but even they can have a constant underlying stress about "if the work dries up I'm homeless". Imagine the same thing but instead of the work drying up your manager only schedules you for four hours a day between the lunch rush and dinner and the tips are minimal despite being there for the same hours.
I think tips in many places are slowly converging into something like a 20% commission paid by the consumer, thanks to restaurants including a suggested tip on the screen or receipt, and bars automatically charging a 20% tip if you don't explicitly close your tab.
I hadn't thought of this before, but keeping tips as formally selected and paid for by the consumer may help the restaurant with liability issues where alcohol is involved. Paying servers and bartenders a direct sales commission might become an issue in court if a customer is overserved.
Some people always like the status quo: no bloc is 100% consistent. With numbers like what you provide, though, this would be a minority of affected people... though, the ones with the most money to lobby.
I wonder if paying servers a commission on the food sales would improve things somewhat. At least it force employers to include that into the price of the items
For food service, specifically waiting tables - how much of the tip is because of effort and better service - and how much is due to the attractiveness and general demographic characteristics of the server?
What confuses me most is when you are given the option to give a tip before any service has been given. On deliveroo, for example, I have the option to tip the driver while I'm at the checkout. Why would I give a reward for good service when I have no idea if the service is even good? There's already a rider fee as part of my bill, so it doesn't make any sense to me to give them more money at that point
It is a mechanism to move labor costs to the consumer. On some delivery apps , the driver can decide which jobs to take based on the pre-service tip. So the companies have effectively put the responsibility to pay driver's base wage on the users themselves, while the company still takes a huge corporate cut
I suggested we do this at work. We’ll add a tip field to our Jira tickets and whoever’s ticket is worth the most gets priority. Oh you submitted a production incident a week ago? Sorry, there’s not even $5 on it, we filter those out.
On delivery apps it should be called a "bid" and I think honestly it would be more ethical than the shady nonsense they do now if they went all in on that.
> It is a mechanism to move labor costs to the consumer.
How does this work? The corp already handles some form of payment to the worker, especially when you tip as part of a card payment. And in both cases, the consumer foots the bill.
How's it different from paying the worker more and asking for more money upfront?
>Are there still customers giving tips as "a reward for good service"?
As in any tip at all? No, from me. I don’t think I’ve never _not_ tipped when the situation expects it (sit down restaurant being served). I know the person there is being paid less than minimum wage (where I live), which is already too low in my opinion, so they get something.
The amount of the tip certainly is highly dependent on level of service. That could be a significant difference at the end. I’ve tipped over 100% when the staff has done someone that stood out to me.
(Having been a server in the past and now in tech, I feel guilty about the work-level/salary imbalance, so I am generally generous with my tips.)
In my country, which does have a tipping culture, the norm is to give a 10% tip in restaurants as a default, for competent service, decent food, etc. If the service is worse than normal (rude server, cold food, huge wait times, mistaken orders etc) you'd live a lower tip, possibly none at all. If the service is great, you might leave a higher tip - though 20% would be considered huge, 12-15% might be quite normal for very good service.
> Are there still customers giving tips as "a reward for good service"?
Sad if this is no longer the case.
In the UK at least (and the rest of Europe too, as far as I can tell), this is still very much the case. The curve varies with the individuals tipping. I would be quite happy to give 20% if the service was outstanding. I’m equally happy to not tip at all if the service was very poor.
I live in the UK, and I personally have never given a tip, I don't think I've even seen it as an option other than physically giving the other person some cash, but AFAIK its generally seen as something you do if the service was excellent, but as I say I've never done it myself. I'm not generally in situations where it could be warranted, like I don't really eat out much or anything like that
Yes, in countries outside the US I don't tip unless I got especially good service. Servers get paid (at least) minimum wage here and if they want more they should take it up with their employer like the rest of us.
In the US I usually tip but have refused to do so when the service was especially bad - although even then its a hard decision because you often don't know who is actually responsible for the bad service.
In my country the norm is for tips to be rounding based rather than percentage. So if your bill is 327.5, you would pay 350, effectively a "keep the change" sort of gesture.
I have certainly starred them in the eye and waited for them to ostentatiously count out every last penny when the service was truly abominable. It's a fairly effective way to give feedback.
You can also of course round up higher, so in the previous example for exceeding expectations you could round up to 400.
In a Louis Rossmann video (i think it was the one on food delivery guys on e-bikes) he mentions never tipping in app but leaving a note that says he will give a cash tip if the driver brings the food straight to his door. That seems like a decent compromise as it doesn't let the app take a cut from the tip and makes so the driver actually goes the extra mile to 'deserve' the tip.
Weirdly on Reddit I keep getting the doordash and ubereats communities pushed at me - there is a very strong view amongst people using these apps that anyone who says they will "give a cash tip" will not actually do it, so it's probably not as beneficial as you might think.
The tips on the apps nominally do go entirely to the driver.
It might be a way for them to prioritize your order before others as they see how much money they earn, so actually it's a bidding process disguised as tipping. I'm not sure if it's shown in the backend though, but I have seen things like this in other delivery apps.
Why would they prioritize you when you've already paid? Wouldn't they first go after the possibility of more tip money on jobs that haven't yet paid it? I mean, if I was a driver, unless there are more high tip jobs than I could handle, I'd take those and fill in with low tip jobs, and I'd deliver the low tip jobs first in a hope of getting an after the fact tip.
A lot of times, that makes the order come slower. A higher tip means the app will pair your order with someone else that didn't tip or tipped smaller, using your money to make up the difference. I consistently get faster deliveries when I tip towards "the average" instead of over tipping
> You’re not paying for a service, you’re bidding in an open market.
IMHO, this isn't a new phenomenon. Close to 18 years ago, I lived in a city with a popular pizza spot that was about a 10 minute walk away. Normally I'd walk, but having a newborn make that challenging, so I'd get delivery.
Typically, the delivery would take 60+ minutes on a busy night, but after a few consecutive Fridays of a decent tip for the order, the pizza would arrive "burn your fingers" in about 20 minutes.
this feels weird to me because i always thought i already paid for the service as part of my order. having to go into a open, blind bidding war with other customers to gett my order processed ...
Doesn’t affect anything in my country using the same apps. I’ve always gotten fast delivery, as does everyone I know and nobody tips. Tipping is for yanks.
Tipping is more like a form of price discrimination. It allows restaurants to indirectly charge different customers different amounts based on ability to pay.
It's mostly a convenience, so that you don't have to look for coins or remember to tip online later. Uber here even tells you that the driver doesn't get informed about the tip until an hour after delivery, so you can still edit it in case you change your mind.
we can literally get the state to say it is illegal for the point of sale system to have that or sell that to merchants
we can tie it to business codes that dictate which type of business it is to payment processors
control behavior by regulating the intermediary
the beauty of this philosophy is that it works under any system of government: don’t worry about the rights afforded to merchants or individuals, don’t burden them with the law at all, only intermediaries!
poof, tips at the point of sale system before receiving service disappears as fast as it came, short Square (now Block)
A delivery app tip is a way to influence drivers to pick your order, they can see what the expected value of a delivery is and if your tip is too low, your order will take a while.
Consider it a premium that prioritizes your order, that’s what it actually is.
The crazier part is that it's spreading to more industries and more countries thanks to Americans thinking they should tip everyone everywhere. Thanks.
My take is that it is spreading not due to culture, but due to how all new point of sale systems / card terminals come with a "tip" feature implemented.
I'm from Europe, and have traveled here extensively. Tipping is pretty rare, but for the past maybe 5 years, almost all new payment terminals have the tipping option.
No, it's spreading because corporations are waking up to what an insanely good deal "pay my employees for me" is.
In my state an employer is only responsible for raising an employee's effective wage (for the entire pay period) to minimum wage if the tips don't.
You can tip someone working as a waiter $100 and unless they've already hit minimum wage for that pay period, all you're doing is handing $100 to the owner because it's $100 they don't have to pay in wages. Once the waiter has met minimum wage, then the money actually goes to them.
It is also not "tip" anymore, it is just "whatever pays the most" gets the service. It is just to maximise profit out of suckers, something US have perfected (from insurance to fast passes).
This is why power/hegemony are good. This is what Euros get for their lazy, easy lives of "work to live" and siestas. You don't get to have your own culture anymore. Start working hard or continue to fade into obscurity.
What's crazy is that you can so confidently claim "tipping is a thing of the past" when it's... not? You can think tipping should go away, that's a completely valid viewpoint. But your statement is just objectively wrong.
I see this a lot (not specific to HN) - some person doesn't like $THING, so they just declare that that thing is bad, or "a thing of the past," or whatever.
Or confidently declaring the _true_ motivations of companies/people, like they, the random internet person, for sure know why some company or a famous person are doing something, and express it as a statement of fact and an agreed upon common sense and not a speculation based on nothing.
Most seen on reddit but seems to be becoming commonplace on here as well.
"Horse riding is a thing of the past" is both clearly true and also wrong if you are being incredibly obtuse. The average person is not riding a horse, but there are still horse riders.
I see this a lot - some person doesn't like a phrase ("a thing of the past"), so they just misread it and take it clearly the wrong way.
Anecdata, but I go to Taco Bell way more often than I should. There’s no tipping culture at Taco Bell, but the staff, at least at the one near my house, are always very nice to me and as far as I can tell my food is made with a sufficient amount of care.
When I do go to a restaurant that has tipping, people are usually nice to me as well, but I don’t feel like they’re really any nicer or better at their job than my local Taco Bell workers.
No, they're definitely more attentive for the tip, I just don't like it. If they're going to be extra nice, I don't want it to be for money. Felt nice going to other countries like Australia where the customer isn't always right but they still do their jobs.
Anyone who has worked in a restaurant or bar can provide plenty of observational data that if you provide better service you will be tipped better. I would recommend trying out working as a server/bartender you will understand tipping a lot better.
This statement is just not factual without some qualification. Where I live, and in the US in general, tipping is not a thing of the past. You can say you wish it was, you can say it should be, but what you said is not factual.
I'm from the UK and travel in the US a lot and US service is much better. I've never had to chase up the check or had to go and search for staff to serve me after sitting there for ten minutes. These are common occurrences in the UK for me.
Ideally, tipping wouldn't exist and everything would be priced in, but pragmatically, incentives grant extra benefits to both parties. Potential for more money for the server, better service (and the ability to punish bad service) for the customer.
(I know everyone making similar observations is getting voted down, so I appreciate I may simply be far off the bell curve on this and the majority experience the total opposite. But it's my reality.)
> I'm from the UK and travel in the US a lot and US service is much better. I've never had to chase up the check or had to go and search for staff to serve me after sitting there for ten minutes. These are common occurrences in the UK for me.
I've had these things in the US. In fact the service generally I've had is all for show, people being really "fake nice" and / or overbearing but then forgetting drinks or food items you ordered.
At least in the UK you can genuinely not tip someone without worrying about them being unable make rent..
I’ve had fantastic service in countries where tipping is not the norm. I’ve had atrocious service in the US. UK service may be worse, but I doubt tipping is the reason for it.
Good service is common in industries where tipping doesn’t happen. What makes restaurants special that their workers can’t provide good service if all of their pay comes from their employer just like everyone else’s?
Tipping is a thing in Eastern (to be more accurate: Central) Europe too, but where I live, tipping is not taxed. Actually, let me be more accurate: people who pay with credit card always tip in cash, as there is no way to tip with a credit card[1]. :P If you buy anything with a credit card, the total amount must always be identical to the sum of the prices of the products, it can never be more, so cannot include tips[1], which forces people who tip to tip with cash.
Food deliveries (similar to Uber Eats in the US I suppose) have the option to tip, and 100% goes to the courier. 200 HUF (0.57 USD) is the most common amount (as per their website[2]). We do not use percentages.
"Cash is untaxed" is a universal rule; there's a food stall that only sells deep fried Vietnamese eggrolls (and has for decades), they prefer cash; in part because cash is untaxed and they may forget to document every sale on occasion, but also because they do relatively low amount transactions (<€10), the €0.25 transaction fee does add up for them.
It's also why "knowing a guy" can be useful, tradesmen coming in on their off hours to do a job for cash.
>>Actually, let me be more accurate: people who pay with credit card always tip in cash, as there is no way to tip with a credit card.
Eh? I don't know if you consider Poland eastern europe(I don't really), but I tip with a card all the time in Poland, you just ask "hey can I leave a tip on the card" and they bump up the amount by whatever you want to tip. And no, the amount doesn't then equal what's on the receipt - I don't know how they work it out internally, but frankly that's not my problem.
If you’re in the US and refuse to tip, you should consider only eating out at places that pay more than the tipped minimum wage (in many states still $2.13 an hour). If you’re going to protest with your wallet, hurt the owners and not the staff.
> and have the restaurant pay their people for their work.
For that, you need the restaurant employees to be organized in a strong, independent, non-corrupt union; or a highly-upstanding restaurant owner/manager.
The latter is sometimes the case, but often/usually - not.
So, former is rarely the case, I'm afraid, because working-class consciousness in many countries is lacking; and forming a union is hard; and restaurant staff have a lot of churn, so by the time you get the idea to do this, or have started work on it, you might be going elsewhere.
But regular restaurant clients taking owners to task about wages is definitely a thing to consider...
“Tipping is a thing of the past” is just a completely false statement, given it’s the norm in the most economically powerful country in the world and not at all u heard of elsewhere (food delivery in many countries, high end restaurants in the UK and elsewhere, etc.) If we’re being generous we can call the claim is vs. ought distinction, except the phrasing doesn’t even leave room for the ought interpretation. It’s just a falsehood (were it was true).
Not sure you know what tipping is, but it's not paying for the meal. It's paying for the service.
1. I like being able to pay for better service
2. Despite what people like to think, everywhere in the world has appreciated tips. I've never had a waiter refuse extra money. Literally dozens of countries, you get better service if you tip.
The cost of a ”meal” in a restaurant is: rent, wages (for chefs, managers, wait staff, etc) ingredients, profit margin, taxes and likely a dozen other things.
Taking one of these items out of the cost and trying to charge it separately is a strange practice.
Not sure where you have (or haven't been), but I've been to several countries where I've tried to tip, and it's confused or even embarrassed the staff. They insisted I take my change. Granted, this was 15-20 years ago, and unfortunately tipping has become more pervasive, not less, so maybe if I were to revisit those places, things would be different.
But I do know this is still the case in Japan. Some Japanese service workers or small business owners will even be insulted if you try to tip.
Having just come back to the States from a trip to Europe — sheesh, I hope not. The service at restaurants everywhere in Europe was at best mediocre, and typically god-awful. Incentivizing good service is good.
Yes, yes, "but the price on the menu says..." Whatever. If you're in the U.S., it's normalized that the price you actually pay is 20% higher, assuming they treat you well. Restaurants don't typically print the tax on their menus either, and yet no one tears their hair out over having to pay sales tax, and various city taxes, etc etc.
The service is so, so much better in the U.S. because of tipping. Tipping culture is good.
Tipping sucks and your taxes suck too. When I see that something costs 15€ on the menu then I expect to pay 15€ and nothing more. How can you be happy about surprise taxes? How can you plan your spending when you don't see how much something costs and you still think this is superior?
I dunno, I was in Europe (Belgium and France) last summer, and I thought the service was generally excellent. A bit slower in France, perhaps, than in the US, but I chalked that up to people just generally not being in as much of a hurry as they can be in the US. (And hell, there are plenty of places in the US where service is slower than I'd like.)
We tend to avoid touristy areas, though, when we travel, so maybe that explains the better service. If I had to work in a service job that caters to tourists, I'd probably be less happy too.
I'd expect all prices to include taxes, be it restaurants or other shops. Everything else is just making it harder for the customer for no reason at all. What you see is what you pay.
Service is quite good in Europe if you ignore the touristy areas. We’re also not into that fake-smiling thing, so maybe that can be seen by an American as “bad service”.
On the other hand, when I visited US on a work trip we've had an absolutely awful service at a restaurant, like the waiter was genuienly rude to us, and at the end I said ok, well, this was awful, I guess we're not leaving a tip then - and our American host laughed and said no, you still have to leave a tip. Why? Because it would be rude not to. And these people earn very little so you have to leave a tip. But.....the service was bad? Why would we tip? "because you have to".
That's nonsense. In the UK if the service is good I leave a tip. If it isn't then I don't. From my (limited) experience in the US it looks like you have to tip regardless. If that's the tipping culture then that culture is rotten.
>>The service is so, so much better in the U.S. because of tipping.
Honest question - do you consider waiters who ask you if you need anything every 2 minutes "good"?
>> The service at restaurants everywhere in Europe was at best mediocre
What's your opinion on restaurants in Poland? Was the service better or worse than in Spain? How was it compared to Czechia and Slovakia?
> At the outset of the Amazon Flex program, from 2015 through late 2016, Amazon paid drivers at least $18 per hour plus 100% of customer tips
> Beginning in late 2016 ... Amazon secretly reduced its own contribution to drivers’ pay to an algorithmically set, internal “base rate” using data it collected about average tips in the area ...
> For example, for a one-hour block offering $18-$25, if Amazon’s base rate in the particular location was $12, and the customer left a $6 tip for the driver, then Amazon paid the driver only $12 and used the full customer tip of $6 to reach its minimum payment of $18 to the driver.
And their punishment was just to pay back what had been taken: I can't imagine there are many other opportunities to steal $61m with the only punishment when you're caught is having to pay it back.
In this case[0] the CEO (Chris Kirchner) stole ~20M$ from the company causing employees to go unpaid for months, and outside of California all they got was owed wages (no interest or anything). While mentioned in the article, what he was mainly convicted of was defrauding investors rather than stealing from employees.
> Apparently, projecting personal prosperity was more important to him than making payroll
He actually had the temerity early on in the debacle when he was still pretending there was money to tell us that they had decided to not pay us that week because it would be bad for the companies investments to withdraw funds then.
> I can't imagine there are many other opportunities to steal $61m with the only punishment when you're caught is having to pay it back.
There was a very famous viral video of a woman stealing offering to just pay for the goods when she was caught, but we all understood why that was a ridiculous idea. Maybe she was just an Amazon VP, so she didn't know any better
My tips have been going down progressively, when I moved to the US I was taught 20% is "normal", now I tip 15% at MOST at restaurants and at MOST 5% on take out.
I'm tired of being shamed to pay more for less.
Also whoever was in charge of teaching staff to "turn away in shame" when the tipping screen is shown needs to go to some sort of gulag.
Not sure how is it now, but when I worked in a plant overtime work was paid at 150% rate of regular pay. Work during national holidays was paid at 200% rate. Isn’t this still the case?
(The workforce at the plant was unionized and the higher rate may have been part of the labor contract. This was in Montreal Canada about 25 years ago. )
Just a historical note as a consolidated response to those who identify 'tipping' as an 16th through 20th century invention. This is incorrect as humans had 'tipping' all the way back to earliest recorded times.
In the middle ages vails or informal rewards were given to well performing servants. In the Roman times corollarium (Lucilius, Seneca), a form of tipping was known. Cicero referred to tipping as stipen although some argue that is not above regular pay.
There are some evidence that in the Han Dynasty, gifts were bestowed on well performing eunuchs, above their normal pay. Considering that in ancient times payments often were in non-monetary compensation, this could be considered a progenitor of tipping.
Incas had similar systems of rewarding service with goods like cloth, though not exactly like modern tipping.
Tipping, as we understand it today, likely did not exist in the same form in ancient civilizations, but there were practices where extra gifts or payments were given for exceptional service.
> What has been will be again, what has been done will be done again; there is nothing new under the sun.
I, personally, believe tipping is detrimental because it encourages preferential treatment. When workers know someone is a generous tipper, they often provide better service to that person than to others who tip more modestly.
In many cases, tipping functions like a form of bribery, incentivizing employees to offer favors or services beyond what is appropriate, which can come at the employer's expense.
It can also create resentment toward customers who don't tip, leading workers to offer poor service and fall short in their duties.
It's been a very long time since my last visit to the USA. I probably paid tips in cash back then. I would assume that workers can chose to never report those tips as income, or not all of them, so no taxes. But if everybody went cashless by now, customers probably pay the restaurant, the restaurant pays the tips to the workers and all of that money is tracked and taxed. Is that correct?
I can kind of see the average traditional service work position to shift into a Uber-esque model where you are a essentially a gig contractor. The worker takes the full risk for slow days, and the business owner does not have to pay you a salary, as everything comes from the customer.
It's fascinating to see the correlation in opinion between taxing tips and raising the minimum wage.
If the prevailing sentiment was to make things easier for low income workers, I would expect people to want to not tax tips, and increase the minimum wage. And people who want less government interference, would want less tax, and lower minimum wage. Those are the two opinions I expected to see.
But instead it seems like people want to tax tips, and increase the minimum wage, which is evidence of a kind of authoritarianism that I did not expect.
Tips are still income. If we increase the minimum wage so that people can afford to live then I can't see any reason why we wouldn't tax tips also.
If you're making $2.50/hr plus tips then I think you deserve a break and not taxing tips is a sensible break. A better solution would be to prevent restaurants from paying their people poverty wages, and if servers aren't risking starvation and homelessness if they go without tips for a week then why would you not include their tips in their regular income?
Raise the minimum wage, require servers to be paid minimum wage, and enforce a straightforward tax on people's income that doesn't distinguish wage from tips. Maybe also increase the 0% tax bracket to something more reasonable, like $20-40k, just to simplify things for people who are struggling to subsist while we're at it.
There is no jurisdiction in the US that allows servers to be paid less than the standard minimum wage. Even where you find server minimum wages (your $2.50/hr example, although not all states allow this) the employer is required to top up to the standard minimum wage if tips don't cover the difference.
Which makes this kind of silly,
> If you're making $2.50/hr plus tips then I think you deserve a break and not taxing tips is a sensible break.
If $2.50/hr + tips exceeds minimum wage, why do you need a special break? You're making more than other minimum wage workers. If $2.50/hr + tips does not add up to minimum wage, the employer has to get you to minimum wage, so you are making no less than someone else making minimum wage.
If people with low income need a break, just give people with low income a break. How that low income is derived is irrelevant.
This is unlikely to be allowed, the last I checked, the law explicitly only allows "traditionally tipped jobs". How it gets interpreted and implemented in IRS Tax Code isn't clear yet, but they will probably have rules in place to prevent this.
Doesn't change the fact that it is a terrible idea.
Hmm, this makes me wonder though -- I have noticed various projects on Github and various other sites allow for users and fans of projects to donate to the developers and maintainers. Who hasn't seen the "wanna buy me a coffee?" button on a site before?
I am not sure if the money from such sources was ever taxed as income, but if so, then I wonder if such will be non-taxable now? Considering donation and tip buttons have some history behind them, perhaps such "jobs" could be considered "traditionally tipped jobs?"
At least the current version of the code has a ton of limits on what can be labeled tips, and the benefit phases out completely around $150k, and is only applicable to professional that traditionally receive a significant portion of income from tips - so it's not like you're going to have billionaires and PE fund managers paying themselves from their companies tens of millions in bonuses labeled as "Tips" and not paying any tax.
~90% of tipped workers REPORT less than $61k in income already. At that income, you're barely paying much income tax anyway.
This is just a trick to make people think they wouldn't have to pay social security and Medicare - which is the main tax they're paying - when in reality, ~90% of tipped workers will get next to nothing.
Doesn't this also open a huge opportunity for tax evasion?
Say I am a small business owner selling a $90 item which is $100 with state sales taxes. I say if you are willing to tip me at least $90, the item is $1. The buyer saves $9 from state sales taxes, and I save on income taxes because tips are exempt from tax.
Yes, this rarely seems to come up in discussions of restaurant tipping culture in the US but especially given that a lot of municipalities have additional hospitality or food and beverage taxes over and above sales tax, there’s a strong incentive to keep menu prices low by encouraging tipping, as a way to minimize the taxable portion of the bill.
If I need to make sure a server earns $200 after tax for a shift in order to be able to attract them to work for me, it is definitely to my advantage for as much of that money as possible to come directly from the customer as tips.
Tax on real tips i.e. cash was already unenforceable, but perhaps it's nice to codify it. Then again, it feels like just another step to shift transactions away from cash.
My daughter works at a mid-tier restaurant 35 hours a week and makes more than my wife who is a math teacher, department head, and has many years of teaching experience.
Eliminating tips and increasing the base wage is a stupid idea. All the talented servers who love the job will leave and mediocre people will replace them.
"Y'all" would be pretty silly to ask a question of little relevance.
Why wouldn't I ask them whether they were happy with their overall compensation, including health benefits, retirement, hours being scheduled, vacation or sick time.
Should I ask those in the back who may or may not be getting the tips from the table?
Tips are supposed to be "in return for a service, beyond the compensation agreed on" (WordsAPI).
If tips instead mean "it's something you have to give when you had no problems with the service provided", and you expect routinely not to have problems with such service providers, then it's implicitly agreed that tips are required, so they are not tips anymore.
It’s simpler than that. It’s gross vote buying and political patronage. Nevada has a large population of tipped service workers. Trump won the state by the largest margin for a Republican since W. Bush in 2000 (back when the state was 65% non-hispanic white versus 45% today). It was probably instrumental in Trump winning hispanic men nationally.
It is interesting that the no tax on tips would expire in 2028, while the tax breaks, most affecting the wealthy, were made permanent in the same bill. A bit of political game i'd say.
Also, "The maximum annual deduction is $25,000 for individuals."
Taxes are still being assessed, and tips over $500 a week won't have their tax refunded.
Some rhetoric during BBB debate was a side effect of a similar political game; cuts for "middle class" in the Tax Cuts and Jobs act from 8 years ago were due to expire, benefits for corporations were not.
"No tax of tips" is one of the most brilliant political ploys ever. You really gotta give Trump credit. It doesn't really cost anything, businesses love it, and you can trot it out as a victory for the working class while you screw them on their health care or energy costs.
It’s not really, it’s the kind of thing that only a populist could do. If a Democrat did this, people would hate it for this very reason. This would just another “NeoLib” concoction to screw the working class.
I’d honestly like to hear from someone who is a proponent of tipping how they think it makes any sense. By that I don’t mean I need the reason for tipping explained to my, everybody understands the argument for why you should tip: but how does it make sense when you consider who you tip and who you don’t?
I’ve finally eliminated all tipping in my life for anything that isn’t sit down restaurant service or an uber ride, and I’ve stopped using delivery apps to instead just pick up food myself.
At first it feels shitty hitting 0 or “no tip” on a payment machine but after the first several times it feels empowering and I doubt employees give a shit anyway. Just do it.
You have a farmer that grows/raises food, butchers and others that 'process' it, you have a team of cooks who prepare/cook the food, and you're supposed to tip the the person who just brings the foor from the kitchen to your table, maybe 20, 30 meters away?!
Sadly, tipping is sprading all over europe too with POS terminals bothering you more and more often for tips.
I grew up in France and tipping in restaurants was definitely a thing, albeit on an entirely different scale than in the US.
Leaving a few francs (I'm not young) was common practice.
With cash payments growing more rare, and without the ability to tip easily with cards, maybe it became much less common.
That said, I don't disagree with your comment on how it's spreading. What I don't love about the terminals asking for tips is that, IMO, it creates an expectation of tipping that wasn't there before.
Now, in Portugal, we're starting to see cases of "here's the price with a 3€ tip (for example), if you want to pay that", and you awkwardly get to say "no thanks I want to pay the actual price", which I find very unpleasant.
On the other hand, we regularly eat out at a place near us that only takes cash. We usually spend about 18€ and I always leave the extra 2€ as a tip.
>Now, in Portugal, we're starting to see cases of "here's the price with a 3€ tip (for example), if you want to pay that", and you awkwardly get to say "no thanks I want to pay the actual price", which I find very unpleasant.
I've lived in Portugal for 30 years and I never had that happen to me. Where are you seeing this? I could only imagine it in a place that only serves tourists and foreigners.
But today, who's getting tips in cash? Not many. Customers are paying for everything with credit cards or contactless, save for the occasional cash-only coffee shop or restaurant.
About half of the large tips at high end restaurants in my town are cash. Sounds like it is about a third in New York. Especially if it is folks who work at a restaurant.
Exactly. My girlfriend who works in sales (sells food) in LA barely gets tips in cash. Most people use their cards. And thus, her tips are tax deductible.
I should have specified that I live in the east-coast United States. Tap-to-pay is almost as common as someone writing you a paper check or an IOU, out here.
I have an honest question: what's the cash vs card tip ratio? 99.999% of the time I am not carrying cash and I don't see many (any?) people paying with cash ANYWHERE in the last 10+ years.
At this point you are litterally a sucker to pay for anything in cash, because everything is marked-up to cover CC fees, which you get a portion of back in the form of rewards.
Yes, I know some places give cash discounts. Most do not.
Almost no one can give you a good answer because it varies by business type and location.
My business does not involve tips (exactly) but I can tell you that I’ve seen anywhere from 20-40% of money run through my system being in cash, depending on where I am in the country.
NYC here, whole lot of cash still showing up in tip jars - there are still and loads of cash-only places around, from bars, restaurants, to street carts, you name it. JG Melon, for instance, is famously cash only. But so too is the bar around the corner from my apartment (Dynaco, do recommend).
...So people often tend to be carrying cash still.
Haha, I had the same thought but now basically everyone is digital so I think its a different ball game than we are used to. At least as a restaurant server/bartender.
The negligence of their national responsibility will be felt like an earthquake by millions of Americans. It's hard to imagine how they live with themselves.
We had to declare our tips at the end of the night, and 10% was the lowest you could claim without needing manager approval. You can guess what everyone declared.
How is an expected tip different from a commission other than who pays?
This is rather brilliant.
* make it look like the government is stealing “gifted” money
* stop taxing it
* turn as many jobs as possible into tipped jobs supposedly for the person’s benefit
* really the employer wins since they’ll pay less and claim “tips”
Yeah we just had to sell out medicare, bomb Iran, destroy USAID, and now restaurant workers can blame the public more for their thief employers not paying them a living wage. I have happily nearly eliminated eating out partially because tipping has become ridiculous but restaurant prices are still very high post-pandemic. Fuck tipping.
I worked as a server for about a year in college, and when we would check out at the end of the night, literally, everyone would just put zero. As in they didn't earn anything. Every time. I'm sure it mess with the taxes in someway or another.
I think with any conversation about tips it is really important to recognize that laws vary dramatically across states[0]. I think talking about this can really drive at the real underlying issues with tipping.
IMO most discussions about tipping are a distraction. "Divide and rule" if you will.
== THE LAW ==
(or my best understanding. IANAL)
For most of the west coast (AK, CA, OR, WA): there is no separate "tipping wage". Tips are *always* on top of *at least* state minimum wage. There is only one minimum wage, so tipping is always a "bonus".
Other places, there are two "minimum wages", but that's confusing because at the end every employee has to make at least the normal minimum wage. The difference is that employers can use tips as credit against this. So, with the exception of Georgia (WTF GA!), employees *must* make the state's minimum wage (default federal). Using federal (min wage = $7.25) an employer *MUST* pay you *no less than* $2.13/hr. This is conditioned that you have made *at least* $5.12/hr in tips. The problem here is what tips count to what wages. Per day? Per week? Per paycheck? DOL says "workweek"[1]
============
So the real (main) problem is actually just straight up good old wage theft. Anyone who is not getting at least minimum wage is suffering from wage theft.
I've heard stories of employees not getting a paycheck "because employer thought it was all tips" (illegal b/c they credited too much) or very small paychecks with the explanation that the employer over-credited tips. There's at least a decently straight-forward way to show what can be credited, and this is why there's the tip amount that you log. Ignoring cameras, the burden is on the employer to prove that they can make these credits, so that line-item on the bill is important (IANAL)
Personally:
I think the entire discussion of tipping often only serves as a distraction to wage. Like there's a lot of person to person fighting of how much we should tip (including not tipping) and frankly, doesn't this discussion often boil down to wage theft? I mean ignoring the already illegal problem of wage theft, what makes a server (who gets tipped) any different from a cashier (who doesn't get tipped) as an employee. Their jobs differ in duties, but we're talking about wage and *fair pay* here. If all the laws are followed, a tipped employee strictly benefits from tips. They have a statistical wage but that wage is max(base_pay, state_minimum) + random_value.
So I think 90% of discussions around tipping end up just being a distraction to create a fictitious divide of "minimum wage workers" vs "tipped workers"[2] who should instead be working as a coalition to increase the floor. They are both minimum wage earners! The main difference is primarily that tipped employees are just more likely to suffer from wage theft, due to how they are paid. But that's also something that both experience, just at different rates.
TLDR:
Getting rid of tips as a concept is a simple solution to the wage theft problem, but isn't the real problem just good old fashion wage theft? (second problem being "is minimum wage minimum"?)
Another symptom, another op ed without any understanding. Usually I'd say something like: minimum wage equals minimum effort. Or: stealing from the corpos is morally justified. But in the light of things: GLORY TO CAPITALISM! You wanted it, you will get it, unlubed, long, and thick. So bend over, chumps, because you're in for a ride you're not ready for.
According to my accountant for my wife’s small business (nail and wax salon) this tax law change will have a significant positive impact on her staff. Not sure what to make of this article, it seems pretty disingenuous.
N=1. Just because your wife's business doesn't fall under the conditions that the article is talking about, it doesn't mean that her business is the norm.
I'm just planning on tipping less to make up for it. In California minimum wages are already $20/hr, and on top of that so many places expect a higher %ge, tip, just cutting my tip by the 10% they pay in tax and being done with it. I pay taxes on my wages. They should too
https://archive.is/20250731232051/https://www.newyorker.com/...
Some interesting points: ~40% of tipped workers don't make enough to get taxed anyway, no tax on tips would actually advantage better paid workers like casino dealers who don't need the help. NToT is described as a campaign to distract from minimum wage increase initiatives.
That’s a weird way to say a sizable majority of tipped workers do pay taxes and will benefit from this.
Beware the logical fallacy. "A implies B" does not mean that "not A implies not B".
Workers who earn too little to pay taxes (A) will not benefit from a tax cut (B).
But workers who earn enough (not A) may still not benefit (not B), for example because their employer indirectly pockets the difference. That is actually being argued in the article.
So this is indeed the appropriate way of formulating the statement: at least 40% of workers will demonstrably not benefit from this.
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it's indirect tax credits for businesses that don't want to pay workers.
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Well, to be fair, the IRS considers the average tip to be 8% for taxation purposes.
The whole "I get taxed whether you tip me or not", "I have to pay to serve you if you don't tip"? No, not so much. If you can show (there's even a hugely burdensome IRS form that might take as much as 3-4 minutes a month for cash tips) that you earned less than that 8% average, then that's what you get taxed. But most servers don't want to fill that form out, because they get ... rather more than that, and are being undertaxed already.
Sure, but TFA makes clear that any benefit to workers from tax-free tips is laughable compared to the numbers of times the restaurant lobby has fucked them over, by repeatedly killing attempts to keep wages low. It's not even throwing workers scraps, it's more like throwing them crumbs.
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They may not pay any income taxes, but they almost certainly pay FICA taxes. If the NToT includes FICA, they would be better off. However, I still think it is terrible idea to advantage some employment classes and means of compensation over others like that.
Yes, creating special exceptions like this is an awful idea.
More carve-outs complicating the tax code and pandering to specific constituents is a bad thing.
It reminds me of listening to a story of how day care business owner-operators are not required by law to contribute to Social Security, don’t, and are then screwed at the end of their life because they don’t have any way to retire.
No tax on tips does not apply to payroll taxes (FICA).
[dead]
https://jacobin.com/2025/07/restaurant-industry-tipped-submi...
https://jacobin.com/2020/10/tipped-restaurant-workers-waiter...
https://cepr.net/publications/customer-tips-are-providing-th...
I live in California and this isn't true here. All restaurant workers receive at least minimum wage before tips. In my city, that's $19/hour with health insurance.
Of course, you're still expected to leave a tip and suggested minimum is now 20%, plus even McDonalds is charging $15 for a 4 oz burger, so I rarely go out to eat at places that expect a tip anymore.
I'm not sure why they specifically should be tax exempt though. Cash tips often were, practically speaking, so a lot of tax evasion was happening, but it still seems odd to single them out.
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Don't forget to reduce your tips by the percentage they were previously being taxed, since it is all charity anyway.
Hopefully this becomes another straw that will eventually break the camels back and we get rid of tipping all together. Every restaurant in the world does not need tips to survive, except for the ones in the US.
This is going to expand tipping dramatically. I don't understand how you could have any optimism that tipping will go away after this is passed.
Businesses are going to work hard to blur the line between a tip and a required payment so that they can call their income a tip while customers think they're obligated to pay it.
Tips subsidize profits, plain and simple. But, America runs on poverty, so this is in line with the broader socioeconomic strategy.
> Tips subsidize profits, plain and simple.
Nah. Profitability for the business would be higher without tips. I take x% of gross income as profit. No tips means I can charge the customer more, which means a higher gross income, which means more profit. When tipping is involved, the money slips through without allowing the business to take its cut. Good for the server, but not good for the business.
However, as theoretically great as it sounds, you are ultimately beholden to what the customer wants. There is good reason why every restaurant that has tried a "no tips" policy has failed. Nobody shows up to dine. They go somewhere else where they can tip instead. Regular people actually enjoy tipping, as hard as it may be to believe for those who are staring at screens rather than enjoying the ambiance of a restaurant.
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I've already been doing that because I tip with cash. Credit card tip is self-contradictory.
Fascinating how America’s response to people being sick of having to tip on everything, tips being little more than a tax on generosity, was to make this most hated form of remuneration even more advantageous.
Since this was passed I just decided to reduce my standard tips from 20% back down to 15%. Figure it works itself out that way.
Agreed 100%. I will enjoy the creative financial engineering that likely comes with this policy, as we attempt to classify more and more things as gratuity, to escape the reach of the IRS.
That's because the business benefits from it the most.
> But, when three members of the group came forward to testify, all expressed support for the Tipped Workers Protection Act and opposition to the One Fair Wage Act, which they portrayed as an effort to steal their tips
This article is missing a real issue here by trying to make the story all about the employers. Many workers like the tip system because it creates inequality among the restaurant workers. Good servers can earn a lot more money than what they’d earn if every server were paid the same, fair wage.
My mom used to work at a furniture store as a floor sales associate on commission. She would regularly clear $120,000/year (this was 15 years ago, so like $180,000 today). A generous wage for the job at the time probably would’ve been $50,000 or so. She would’ve fought such a policy tooth and nail.
Is the definition of a good server in this case one who can serve more tables than others in the same amount of time? In most places tips are mandatory and % does not depend much on anything unless someone messed up.
Commission on sales is very different from restaurant tips.
Tips, at least in the US has never been mandatory but it is an immense social pressure. Besides, my understanding is that tipping % is arbitrary anyway - there have been studies that show good looking people get more tips.
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The final cost of the bill matters more than anything. A server at a higher-end restaurant where the bills regularly exceed hundreds of dollars will earn more in tips serving fewer tables than a server that works at a cheaper casual-chain restaurant (IHOP, Applebees, etc).
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More so than tables per unit time, it's dollars per unit time. When I was a server, the usual metric of how well you performed on a given shift was the total of your bills ("how much you sold"). The best servers were good at encouraging parties to spend on the things they were on the fence about: the appetizer, the second drink, the dessert. Even with the volatility of individual tipping decisions, getting your tables to order more increases the EV of your total tips.
I don't think you read the article. It explains that those three members who came forward were not actually servers, but restaurant management & owners. Additionally, the article is not missing this issue you call out. The author goes so far as to discuss Casino dealers in Vegas who would stand to gain the most out of this sales tax proposal (sales commissions in your anecdote do not count as tips). But primarily, the author is concerned about the 1/3 of tipped workers who do not pay federal income tax and are at risk of falling below the poverty line due to reductions in their minimum wage.
Servers also know that if tips are outlawed, they will never make that much money again.
It's possible for high end bartenders or servers to make over $500 a night in tips. The whiplash of moving into true salary or hourly work is an open secret in the high end service industry. This is why you see some old waiters and bartenders hanging around, when some people consider the service industry "entry level."
This is also why I don't like to listen to them complain about their jobs lol. The difficulty of work to income ratio is unique to this industry.
Yeah, if you're lucky you can make a huge amount of money in tips - if you're the right server on the right night at the right place and get the right customers.
You can also, if you're not lucky, barely make anything in tips on minimal hours per week and then have your employer steal half your tips anyway, and then you're basically clearing $4.50/hr for 12 hours a week and probably ending up on food stamps until republicans eliminate those entirely.
Thing is, I've known freelancers who make great money, but even they can have a constant underlying stress about "if the work dries up I'm homeless". Imagine the same thing but instead of the work drying up your manager only schedules you for four hours a day between the lunch rush and dinner and the tips are minimal despite being there for the same hours.
Sales' commissions and servers' tips is an apples-to-oranges comparison.
I think tips in many places are slowly converging into something like a 20% commission paid by the consumer, thanks to restaurants including a suggested tip on the screen or receipt, and bars automatically charging a 20% tip if you don't explicitly close your tab.
I hadn't thought of this before, but keeping tips as formally selected and paid for by the consumer may help the restaurant with liability issues where alcohol is involved. Paying servers and bartenders a direct sales commission might become an issue in court if a customer is overserved.
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Some people always like the status quo: no bloc is 100% consistent. With numbers like what you provide, though, this would be a minority of affected people... though, the ones with the most money to lobby.
I wonder if paying servers a commission on the food sales would improve things somewhat. At least it force employers to include that into the price of the items
>creates inequality
Did you mean that it rewards them for their efforts?
For food service, specifically waiting tables - how much of the tip is because of effort and better service - and how much is due to the attractiveness and general demographic characteristics of the server?
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I guess carrying around a large rack takes more effort than a small one.
What confuses me most is when you are given the option to give a tip before any service has been given. On deliveroo, for example, I have the option to tip the driver while I'm at the checkout. Why would I give a reward for good service when I have no idea if the service is even good? There's already a rider fee as part of my bill, so it doesn't make any sense to me to give them more money at that point
It is a mechanism to move labor costs to the consumer. On some delivery apps , the driver can decide which jobs to take based on the pre-service tip. So the companies have effectively put the responsibility to pay driver's base wage on the users themselves, while the company still takes a huge corporate cut
I suggested we do this at work. We’ll add a tip field to our Jira tickets and whoever’s ticket is worth the most gets priority. Oh you submitted a production incident a week ago? Sorry, there’s not even $5 on it, we filter those out.
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On delivery apps it should be called a "bid" and I think honestly it would be more ethical than the shady nonsense they do now if they went all in on that.
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> It is a mechanism to move labor costs to the consumer.
How does this work? The corp already handles some form of payment to the worker, especially when you tip as part of a card payment. And in both cases, the consumer foots the bill.
How's it different from paying the worker more and asking for more money upfront?
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> when you are given the option to give a tip before any service has been given [...] why would I give a reward for good service
Are there still customers giving tips as "a reward for good service"?
I'm trying to imagine a curve representing the distribution of "quality of service".
What shape is the curve, and where on it would a 20% tip and a 0% tip be?
>Are there still customers giving tips as "a reward for good service"?
As in any tip at all? No, from me. I don’t think I’ve never _not_ tipped when the situation expects it (sit down restaurant being served). I know the person there is being paid less than minimum wage (where I live), which is already too low in my opinion, so they get something.
The amount of the tip certainly is highly dependent on level of service. That could be a significant difference at the end. I’ve tipped over 100% when the staff has done someone that stood out to me.
(Having been a server in the past and now in tech, I feel guilty about the work-level/salary imbalance, so I am generally generous with my tips.)
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In my country, which does have a tipping culture, the norm is to give a 10% tip in restaurants as a default, for competent service, decent food, etc. If the service is worse than normal (rude server, cold food, huge wait times, mistaken orders etc) you'd live a lower tip, possibly none at all. If the service is great, you might leave a higher tip - though 20% would be considered huge, 12-15% might be quite normal for very good service.
> Are there still customers giving tips as "a reward for good service"?
Sad if this is no longer the case.
In the UK at least (and the rest of Europe too, as far as I can tell), this is still very much the case. The curve varies with the individuals tipping. I would be quite happy to give 20% if the service was outstanding. I’m equally happy to not tip at all if the service was very poor.
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I live in the UK, and I personally have never given a tip, I don't think I've even seen it as an option other than physically giving the other person some cash, but AFAIK its generally seen as something you do if the service was excellent, but as I say I've never done it myself. I'm not generally in situations where it could be warranted, like I don't really eat out much or anything like that
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Yes, in countries outside the US I don't tip unless I got especially good service. Servers get paid (at least) minimum wage here and if they want more they should take it up with their employer like the rest of us.
In the US I usually tip but have refused to do so when the service was especially bad - although even then its a hard decision because you often don't know who is actually responsible for the bad service.
In my country the norm is for tips to be rounding based rather than percentage. So if your bill is 327.5, you would pay 350, effectively a "keep the change" sort of gesture.
I have certainly starred them in the eye and waited for them to ostentatiously count out every last penny when the service was truly abominable. It's a fairly effective way to give feedback.
You can also of course round up higher, so in the previous example for exceeding expectations you could round up to 400.
>Are there still customers giving tips as "a reward for good service"?
That's the only way people give tips here (not US tho)
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In 30+ years I’ve given exactly two restaurant servers 0% tip - it takes a lot for me to give someone nothing, but somehow they met the challenge.
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> Are there still customers giving tips as "a reward for good service"?
Are there customers giving tips for other reasons? Any examples?
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Are there still customers giving tips as "a reward for good service"?
Yes.
In a Louis Rossmann video (i think it was the one on food delivery guys on e-bikes) he mentions never tipping in app but leaving a note that says he will give a cash tip if the driver brings the food straight to his door. That seems like a decent compromise as it doesn't let the app take a cut from the tip and makes so the driver actually goes the extra mile to 'deserve' the tip.
Weirdly on Reddit I keep getting the doordash and ubereats communities pushed at me - there is a very strong view amongst people using these apps that anyone who says they will "give a cash tip" will not actually do it, so it's probably not as beneficial as you might think.
The tips on the apps nominally do go entirely to the driver.
>* but leaving a note that says he will give a cash tip if the driver brings the food straight to his door.*
Why, where else would they take the food? Leave in at the patio? Drop it on the lawn?
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Thank you for this tip on analog defense against digital dark patterns!
It might be a way for them to prioritize your order before others as they see how much money they earn, so actually it's a bidding process disguised as tipping. I'm not sure if it's shown in the backend though, but I have seen things like this in other delivery apps.
Why would they prioritize you when you've already paid? Wouldn't they first go after the possibility of more tip money on jobs that haven't yet paid it? I mean, if I was a driver, unless there are more high tip jobs than I could handle, I'd take those and fill in with low tip jobs, and I'd deliver the low tip jobs first in a hope of getting an after the fact tip.
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A lot of times, that makes the order come slower. A higher tip means the app will pair your order with someone else that didn't tip or tipped smaller, using your money to make up the difference. I consistently get faster deliveries when I tip towards "the average" instead of over tipping
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You’re not paying for a service, you’re bidding in an open market. They don’t tell you this but it’s the reality.
Drivers can tell if you don’t tip and all of the experienced ones will decline your order.
Though these apps have done a lot of work to conceal the amount the driver actually gets until delivery is completed.
Hm. If it is an open market, the consumer should also be able to decline/filter drivers, that take tips. Maybe it is a market, but sadly not open.
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> You’re not paying for a service, you’re bidding in an open market.
IMHO, this isn't a new phenomenon. Close to 18 years ago, I lived in a city with a popular pizza spot that was about a 10 minute walk away. Normally I'd walk, but having a newborn make that challenging, so I'd get delivery.
Typically, the delivery would take 60+ minutes on a busy night, but after a few consecutive Fridays of a decent tip for the order, the pizza would arrive "burn your fingers" in about 20 minutes.
> bidding in an open market.. they don't tell you... apps done a lot of work to conceal
Markets have prices.
Open markets have transparent pricing for efficient discovery.
Concealed prices in deniable auctions are closer to dark pools than open markets.
Surely most customers would benefit from knowing that they’re bidding for service? Don’t call it a tip, but a bid or priority fee.
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this feels weird to me because i always thought i already paid for the service as part of my order. having to go into a open, blind bidding war with other customers to gett my order processed ...
With Wolt the rider can’t see tips until after delivery.
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Doesn’t affect anything in my country using the same apps. I’ve always gotten fast delivery, as does everyone I know and nobody tips. Tipping is for yanks.
That's bad, but even worse is the Bluetti website, which asks you for a service tip FOR AN ONLINE ORDER!
I started using Fiverr for outsourcing some tasks and they push you to tip after the transaction.
That's not a tip, it's a bid. Expect a lot more businesses to start operating like this if no tax on tips goes into effect.
Tip before service is a bribe in my book.
(Uber started to pop up tip options before the ride ends, sometimes as soon as the ride starts.)
Tipping is more like a form of price discrimination. It allows restaurants to indirectly charge different customers different amounts based on ability to pay.
They’re just saying the quiet part out loud, the tip isn’t for service, it’s for their basic wage.
Is almost like a bribe I guess?
It's mostly a convenience, so that you don't have to look for coins or remember to tip online later. Uber here even tells you that the driver doesn't get informed about the tip until an hour after delivery, so you can still edit it in case you change your mind.
we can regulate the intermediary
we can literally get the state to say it is illegal for the point of sale system to have that or sell that to merchants
we can tie it to business codes that dictate which type of business it is to payment processors
control behavior by regulating the intermediary
the beauty of this philosophy is that it works under any system of government: don’t worry about the rights afforded to merchants or individuals, don’t burden them with the law at all, only intermediaries!
poof, tips at the point of sale system before receiving service disappears as fast as it came, short Square (now Block)
we can go deeper too
A delivery app tip is a way to influence drivers to pick your order, they can see what the expected value of a delivery is and if your tip is too low, your order will take a while.
Consider it a premium that prioritizes your order, that’s what it actually is.
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It’s crazy that this still happens in the US.
Tipping is a thing of the past. Pay for your meal and have the restaurant pay their people for their work. End of story.
The crazier part is that it's spreading to more industries and more countries thanks to Americans thinking they should tip everyone everywhere. Thanks.
My take is that it is spreading not due to culture, but due to how all new point of sale systems / card terminals come with a "tip" feature implemented.
I'm from Europe, and have traveled here extensively. Tipping is pretty rare, but for the past maybe 5 years, almost all new payment terminals have the tipping option.
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No, it's spreading because corporations are waking up to what an insanely good deal "pay my employees for me" is.
In my state an employer is only responsible for raising an employee's effective wage (for the entire pay period) to minimum wage if the tips don't.
You can tip someone working as a waiter $100 and unless they've already hit minimum wage for that pay period, all you're doing is handing $100 to the owner because it's $100 they don't have to pay in wages. Once the waiter has met minimum wage, then the money actually goes to them.
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Because they know they can get away with it.
It is also not "tip" anymore, it is just "whatever pays the most" gets the service. It is just to maximise profit out of suckers, something US have perfected (from insurance to fast passes).
Living in Ireland from 2013-2023 I saw tipping get _much_ more common, sadly.
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This is why power/hegemony are good. This is what Euros get for their lazy, easy lives of "work to live" and siestas. You don't get to have your own culture anymore. Start working hard or continue to fade into obscurity.
Yep. It's wonderful throwing a few extra bucks to some euro waiter and watching them treat you better than everyone else.
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What's crazy is that you can so confidently claim "tipping is a thing of the past" when it's... not? You can think tipping should go away, that's a completely valid viewpoint. But your statement is just objectively wrong.
I see this a lot (not specific to HN) - some person doesn't like $THING, so they just declare that that thing is bad, or "a thing of the past," or whatever.
Saying something is a “thing of the past” is the same as saying that something is archaic and should go away. It’s not a declaration of fact.
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Or confidently declaring the _true_ motivations of companies/people, like they, the random internet person, for sure know why some company or a famous person are doing something, and express it as a statement of fact and an agreed upon common sense and not a speculation based on nothing.
Most seen on reddit but seems to be becoming commonplace on here as well.
"Horse riding is a thing of the past" is both clearly true and also wrong if you are being incredibly obtuse. The average person is not riding a horse, but there are still horse riders.
I see this a lot - some person doesn't like a phrase ("a thing of the past"), so they just misread it and take it clearly the wrong way.
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There’s very little empirical evidence correlating tipping with better service.
There is evidence correlating being attractive to getting better tips, interestingly.
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Anecdata, but I go to Taco Bell way more often than I should. There’s no tipping culture at Taco Bell, but the staff, at least at the one near my house, are always very nice to me and as far as I can tell my food is made with a sufficient amount of care.
When I do go to a restaurant that has tipping, people are usually nice to me as well, but I don’t feel like they’re really any nicer or better at their job than my local Taco Bell workers.
No, they're definitely more attentive for the tip, I just don't like it. If they're going to be extra nice, I don't want it to be for money. Felt nice going to other countries like Australia where the customer isn't always right but they still do their jobs.
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Anyone who has worked in a restaurant or bar can provide plenty of observational data that if you provide better service you will be tipped better. I would recommend trying out working as a server/bartender you will understand tipping a lot better.
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There is definitely a huge difference in countries where they tip and countries where they don't tip.
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Also a tip goes to the pretty face who bring you plates.
However, the whole restaurant experience is made by many people: dishwasher boy, prep boy, shef, cleaning lady, etc.
They should tip to cleaning lady as dirty toilet can ruin whole "experience".
In many restaurants the tip is split between all of those people. You just don't know it because they don't exactly post their tip policy.
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> Tipping is a thing of the past.
This statement is just not factual without some qualification. Where I live, and in the US in general, tipping is not a thing of the past. You can say you wish it was, you can say it should be, but what you said is not factual.
I agree with your post. But..
I'm from the UK and travel in the US a lot and US service is much better. I've never had to chase up the check or had to go and search for staff to serve me after sitting there for ten minutes. These are common occurrences in the UK for me.
Ideally, tipping wouldn't exist and everything would be priced in, but pragmatically, incentives grant extra benefits to both parties. Potential for more money for the server, better service (and the ability to punish bad service) for the customer.
(I know everyone making similar observations is getting voted down, so I appreciate I may simply be far off the bell curve on this and the majority experience the total opposite. But it's my reality.)
> I'm from the UK and travel in the US a lot and US service is much better. I've never had to chase up the check or had to go and search for staff to serve me after sitting there for ten minutes. These are common occurrences in the UK for me.
I've had these things in the US. In fact the service generally I've had is all for show, people being really "fake nice" and / or overbearing but then forgetting drinks or food items you ordered.
At least in the UK you can genuinely not tip someone without worrying about them being unable make rent..
But people do tip at restaurants in the UK. So what are you saying is the difference?
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I’ve had fantastic service in countries where tipping is not the norm. I’ve had atrocious service in the US. UK service may be worse, but I doubt tipping is the reason for it.
Good service is common in industries where tipping doesn’t happen. What makes restaurants special that their workers can’t provide good service if all of their pay comes from their employer just like everyone else’s?
Tipping is a thing in Eastern (to be more accurate: Central) Europe too, but where I live, tipping is not taxed. Actually, let me be more accurate: people who pay with credit card always tip in cash, as there is no way to tip with a credit card[1]. :P If you buy anything with a credit card, the total amount must always be identical to the sum of the prices of the products, it can never be more, so cannot include tips[1], which forces people who tip to tip with cash.
Food deliveries (similar to Uber Eats in the US I suppose) have the option to tip, and 100% goes to the courier. 200 HUF (0.57 USD) is the most common amount (as per their website[2]). We do not use percentages.
[1] It varies and might not be universal.
[2] https://foodora.hu
"Cash is untaxed" is a universal rule; there's a food stall that only sells deep fried Vietnamese eggrolls (and has for decades), they prefer cash; in part because cash is untaxed and they may forget to document every sale on occasion, but also because they do relatively low amount transactions (<€10), the €0.25 transaction fee does add up for them.
It's also why "knowing a guy" can be useful, tradesmen coming in on their off hours to do a job for cash.
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>>Actually, let me be more accurate: people who pay with credit card always tip in cash, as there is no way to tip with a credit card.
Eh? I don't know if you consider Poland eastern europe(I don't really), but I tip with a card all the time in Poland, you just ask "hey can I leave a tip on the card" and they bump up the amount by whatever you want to tip. And no, the amount doesn't then equal what's on the receipt - I don't know how they work it out internally, but frankly that's not my problem.
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The Taco Johns near where I work has a tip jar outside the drive-thru window.
I don't know of any other fast food place that does that.
In my experience as a former enjoyer, Taco John's needs all the help they can get =P
That's why I never tip. Otherwise you're giving the perfect excuse to restaurant owners to lower wages.
- have a liveable minimum wage - force restaurant owners to pay at least that
period
If you’re in the US and refuse to tip, you should consider only eating out at places that pay more than the tipped minimum wage (in many states still $2.13 an hour). If you’re going to protest with your wallet, hurt the owners and not the staff.
> and have the restaurant pay their people for their work.
For that, you need the restaurant employees to be organized in a strong, independent, non-corrupt union; or a highly-upstanding restaurant owner/manager.
The latter is sometimes the case, but often/usually - not.
So, former is rarely the case, I'm afraid, because working-class consciousness in many countries is lacking; and forming a union is hard; and restaurant staff have a lot of churn, so by the time you get the idea to do this, or have started work on it, you might be going elsewhere.
But regular restaurant clients taking owners to task about wages is definitely a thing to consider...
“Tipping is a thing of the past” is just a completely false statement, given it’s the norm in the most economically powerful country in the world and not at all u heard of elsewhere (food delivery in many countries, high end restaurants in the UK and elsewhere, etc.) If we’re being generous we can call the claim is vs. ought distinction, except the phrasing doesn’t even leave room for the ought interpretation. It’s just a falsehood (were it was true).
> Pay for your meal
Not sure you know what tipping is, but it's not paying for the meal. It's paying for the service.
1. I like being able to pay for better service
2. Despite what people like to think, everywhere in the world has appreciated tips. I've never had a waiter refuse extra money. Literally dozens of countries, you get better service if you tip.
Not sure you know, but in literally dozens of countries, waiters get a proper salary.
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The cost of a ”meal” in a restaurant is: rent, wages (for chefs, managers, wait staff, etc) ingredients, profit margin, taxes and likely a dozen other things.
Taking one of these items out of the cost and trying to charge it separately is a strange practice.
Japanese waiters will literally refuse your money of your try to tip. It's literally insulting to them if you offer more than asked for
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The tip is usually given at the end of the service. How does that ensure a better experience during?
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There are 3 types of countries x industries (because even within a country different cultures may apply)
1. Places where service workers are paid peanuts or nothing and tipping is considered mandatory
2. Places where workers get a basic actual salary and tipping is rather voluntary (and can be more or less expected)
3. Places where tipping is not an actual practice and can make things awkward even, depending the amount.
In reality, 2 is a spectrum between 1 and 3.
Not sure where you have (or haven't been), but I've been to several countries where I've tried to tip, and it's confused or even embarrassed the staff. They insisted I take my change. Granted, this was 15-20 years ago, and unfortunately tipping has become more pervasive, not less, so maybe if I were to revisit those places, things would be different.
But I do know this is still the case in Japan. Some Japanese service workers or small business owners will even be insulted if you try to tip.
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Having just come back to the States from a trip to Europe — sheesh, I hope not. The service at restaurants everywhere in Europe was at best mediocre, and typically god-awful. Incentivizing good service is good.
Yes, yes, "but the price on the menu says..." Whatever. If you're in the U.S., it's normalized that the price you actually pay is 20% higher, assuming they treat you well. Restaurants don't typically print the tax on their menus either, and yet no one tears their hair out over having to pay sales tax, and various city taxes, etc etc.
The service is so, so much better in the U.S. because of tipping. Tipping culture is good.
Maybe you went to mediocre restaurants?
Tipping sucks and your taxes suck too. When I see that something costs 15€ on the menu then I expect to pay 15€ and nothing more. How can you be happy about surprise taxes? How can you plan your spending when you don't see how much something costs and you still think this is superior?
I dunno, I was in Europe (Belgium and France) last summer, and I thought the service was generally excellent. A bit slower in France, perhaps, than in the US, but I chalked that up to people just generally not being in as much of a hurry as they can be in the US. (And hell, there are plenty of places in the US where service is slower than I'd like.)
We tend to avoid touristy areas, though, when we travel, so maybe that explains the better service. If I had to work in a service job that caters to tourists, I'd probably be less happy too.
Having been to Europe multiple times, hard disagree. I don't know why you had bad experiences everywhere, but I have hardly had any.
I'd expect all prices to include taxes, be it restaurants or other shops. Everything else is just making it harder for the customer for no reason at all. What you see is what you pay.
Service is quite good in Europe if you ignore the touristy areas. We’re also not into that fake-smiling thing, so maybe that can be seen by an American as “bad service”.
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On the other hand, when I visited US on a work trip we've had an absolutely awful service at a restaurant, like the waiter was genuienly rude to us, and at the end I said ok, well, this was awful, I guess we're not leaving a tip then - and our American host laughed and said no, you still have to leave a tip. Why? Because it would be rude not to. And these people earn very little so you have to leave a tip. But.....the service was bad? Why would we tip? "because you have to".
That's nonsense. In the UK if the service is good I leave a tip. If it isn't then I don't. From my (limited) experience in the US it looks like you have to tip regardless. If that's the tipping culture then that culture is rotten.
>>The service is so, so much better in the U.S. because of tipping.
Honest question - do you consider waiters who ask you if you need anything every 2 minutes "good"?
>> The service at restaurants everywhere in Europe was at best mediocre
What's your opinion on restaurants in Poland? Was the service better or worse than in Spain? How was it compared to Czechia and Slovakia?
Not my experience.
I've got great and shit service in Europe.
I've got great and shit service in the US.
Tip/no-tip hasn't been a factor.
For example, Amazon caught lowering delivery driver pay with the tips making up the difference and then lying about it: https://www.ftc.gov/system/files/documents/cases/amazon_flex...
> At the outset of the Amazon Flex program, from 2015 through late 2016, Amazon paid drivers at least $18 per hour plus 100% of customer tips
> Beginning in late 2016 ... Amazon secretly reduced its own contribution to drivers’ pay to an algorithmically set, internal “base rate” using data it collected about average tips in the area ...
> For example, for a one-hour block offering $18-$25, if Amazon’s base rate in the particular location was $12, and the customer left a $6 tip for the driver, then Amazon paid the driver only $12 and used the full customer tip of $6 to reach its minimum payment of $18 to the driver.
And their punishment was just to pay back what had been taken: I can't imagine there are many other opportunities to steal $61m with the only punishment when you're caught is having to pay it back.
The largest type theft done in the United States, by far, for decades, is wage theft. In terms of dollars stolen.
All other forms of serious crime have dramatically fallen since the 90's per Capita. Some are at 1/3 the rate they were then. (FBI UCR)
remember that next time you see a headline or politician speak about crime.
We are safer, doing less crime to each other, and seeing more prison population than ever before.
While corporations crush us illegally and face no consequences.
The US prison population has been declining since 2010: https://en.m.wikipedia.org/wiki/United_States_incarceration_...
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In this case[0] the CEO (Chris Kirchner) stole ~20M$ from the company causing employees to go unpaid for months, and outside of California all they got was owed wages (no interest or anything). While mentioned in the article, what he was mainly convicted of was defrauding investors rather than stealing from employees.
> Apparently, projecting personal prosperity was more important to him than making payroll
He actually had the temerity early on in the debacle when he was still pretending there was money to tell us that they had decided to not pay us that week because it would be bad for the companies investments to withdraw funds then.
[0] https://www.justice.gov/usao-ndtx/pr/slync-founder-sentenced...
> I can't imagine there are many other opportunities to steal $61m with the only punishment when you're caught is having to pay it back.
There was a very famous viral video of a woman stealing offering to just pay for the goods when she was caught, but we all understood why that was a ridiculous idea. Maybe she was just an Amazon VP, so she didn't know any better
You know what would actually help workers in tipped positions? Going after wage theft. Taxes on tips are a drop in the bucket compared to wage theft.
My tips have been going down progressively, when I moved to the US I was taught 20% is "normal", now I tip 15% at MOST at restaurants and at MOST 5% on take out.
I'm tired of being shamed to pay more for less.
Also whoever was in charge of teaching staff to "turn away in shame" when the tipping screen is shown needs to go to some sort of gulag.
> and at MOST 5% on take out
Why would you ever tip on take out? What are you tipping for exactly?
The people who cooked the food
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Aren't we creating incentives for workers abuse:
- No tax on overtime: so now making them work 60 hours a week is cheaper for the employer
- No tax on tips: so the tip based payment model is cheaper
Yes, and my understanding is that this is precisely the point.
Not sure how is it now, but when I worked in a plant overtime work was paid at 150% rate of regular pay. Work during national holidays was paid at 200% rate. Isn’t this still the case?
(The workforce at the plant was unionized and the higher rate may have been part of the labor contract. This was in Montreal Canada about 25 years ago. )
Income tax is paid from employee salaries/wages, not by employers.
Doesn’t matter, money is fungible.
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How is it cheaper for the employer?
They can pay lower wages because the employee is losing less of their income to tax. Supply and demand.
For the same amount of money employee gets it requires employer to pay out less.
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Just a historical note as a consolidated response to those who identify 'tipping' as an 16th through 20th century invention. This is incorrect as humans had 'tipping' all the way back to earliest recorded times.
In the middle ages vails or informal rewards were given to well performing servants. In the Roman times corollarium (Lucilius, Seneca), a form of tipping was known. Cicero referred to tipping as stipen although some argue that is not above regular pay.
There are some evidence that in the Han Dynasty, gifts were bestowed on well performing eunuchs, above their normal pay. Considering that in ancient times payments often were in non-monetary compensation, this could be considered a progenitor of tipping.
Incas had similar systems of rewarding service with goods like cloth, though not exactly like modern tipping.
Tipping, as we understand it today, likely did not exist in the same form in ancient civilizations, but there were practices where extra gifts or payments were given for exceptional service.
> What has been will be again, what has been done will be done again; there is nothing new under the sun.
I, personally, believe tipping is detrimental because it encourages preferential treatment. When workers know someone is a generous tipper, they often provide better service to that person than to others who tip more modestly.
In many cases, tipping functions like a form of bribery, incentivizing employees to offer favors or services beyond what is appropriate, which can come at the employer's expense.
It can also create resentment toward customers who don't tip, leading workers to offer poor service and fall short in their duties.
> "we are going to not charge taxes on tips"
It's been a very long time since my last visit to the USA. I probably paid tips in cash back then. I would assume that workers can chose to never report those tips as income, or not all of them, so no taxes. But if everybody went cashless by now, customers probably pay the restaurant, the restaurant pays the tips to the workers and all of that money is tracked and taxed. Is that correct?
Yes, that is correct.
yes
I can kind of see the average traditional service work position to shift into a Uber-esque model where you are a essentially a gig contractor. The worker takes the full risk for slow days, and the business owner does not have to pay you a salary, as everything comes from the customer.
That’s exactly what US waiter employment is. And it needs to die.
It's fascinating to see the correlation in opinion between taxing tips and raising the minimum wage.
If the prevailing sentiment was to make things easier for low income workers, I would expect people to want to not tax tips, and increase the minimum wage. And people who want less government interference, would want less tax, and lower minimum wage. Those are the two opinions I expected to see.
But instead it seems like people want to tax tips, and increase the minimum wage, which is evidence of a kind of authoritarianism that I did not expect.
Tips are still income. If we increase the minimum wage so that people can afford to live then I can't see any reason why we wouldn't tax tips also.
If you're making $2.50/hr plus tips then I think you deserve a break and not taxing tips is a sensible break. A better solution would be to prevent restaurants from paying their people poverty wages, and if servers aren't risking starvation and homelessness if they go without tips for a week then why would you not include their tips in their regular income?
Raise the minimum wage, require servers to be paid minimum wage, and enforce a straightforward tax on people's income that doesn't distinguish wage from tips. Maybe also increase the 0% tax bracket to something more reasonable, like $20-40k, just to simplify things for people who are struggling to subsist while we're at it.
> require servers to be paid minimum wage
There is no jurisdiction in the US that allows servers to be paid less than the standard minimum wage. Even where you find server minimum wages (your $2.50/hr example, although not all states allow this) the employer is required to top up to the standard minimum wage if tips don't cover the difference.
Which makes this kind of silly,
> If you're making $2.50/hr plus tips then I think you deserve a break and not taxing tips is a sensible break.
If $2.50/hr + tips exceeds minimum wage, why do you need a special break? You're making more than other minimum wage workers. If $2.50/hr + tips does not add up to minimum wage, the employer has to get you to minimum wage, so you are making no less than someone else making minimum wage.
If people with low income need a break, just give people with low income a break. How that low income is derived is irrelevant.
All bonuses soon to be labelled as tips.
This is unlikely to be allowed, the last I checked, the law explicitly only allows "traditionally tipped jobs". How it gets interpreted and implemented in IRS Tax Code isn't clear yet, but they will probably have rules in place to prevent this.
Doesn't change the fact that it is a terrible idea.
Hmm, this makes me wonder though -- I have noticed various projects on Github and various other sites allow for users and fans of projects to donate to the developers and maintainers. Who hasn't seen the "wanna buy me a coffee?" button on a site before?
I am not sure if the money from such sources was ever taxed as income, but if so, then I wonder if such will be non-taxable now? Considering donation and tip buttons have some history behind them, perhaps such "jobs" could be considered "traditionally tipped jobs?"
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At least the current version of the code has a ton of limits on what can be labeled tips, and the benefit phases out completely around $150k, and is only applicable to professional that traditionally receive a significant portion of income from tips - so it's not like you're going to have billionaires and PE fund managers paying themselves from their companies tens of millions in bonuses labeled as "Tips" and not paying any tax.
~90% of tipped workers REPORT less than $61k in income already. At that income, you're barely paying much income tax anyway.
This is just a trick to make people think they wouldn't have to pay social security and Medicare - which is the main tax they're paying - when in reality, ~90% of tipped workers will get next to nothing.
Plenty of early stage PMC jobs make under $150k, pay bonuses and CEOs would gladly be able to pay a little less if they can finagle it to be tax free.
Do they have a list of professions and industries eligible or are they going with weak “traditionally tipped “ language?
And we expect the DOGEd and defanged IRS to vigorously enforce?
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The most galling part is how the industry manages to manufacture worker consent through PR spin and management plants in hearings
Doesn't this also open a huge opportunity for tax evasion?
Say I am a small business owner selling a $90 item which is $100 with state sales taxes. I say if you are willing to tip me at least $90, the item is $1. The buyer saves $9 from state sales taxes, and I save on income taxes because tips are exempt from tax.
The law accounts for this. Jobs and industries that previously and traditionally don’t work on tips cannot convert to a method you describe.
Yes, this rarely seems to come up in discussions of restaurant tipping culture in the US but especially given that a lot of municipalities have additional hospitality or food and beverage taxes over and above sales tax, there’s a strong incentive to keep menu prices low by encouraging tipping, as a way to minimize the taxable portion of the bill.
If I need to make sure a server earns $200 after tax for a shift in order to be able to attract them to work for me, it is definitely to my advantage for as much of that money as possible to come directly from the customer as tips.
I’m not sure if this is meaningfully different from offering a cash discount because you evade taxes on cash transactions.
And EMV fees.
Tax on real tips i.e. cash was already unenforceable, but perhaps it's nice to codify it. Then again, it feels like just another step to shift transactions away from cash.
My daughter works at a mid-tier restaurant 35 hours a week and makes more than my wife who is a math teacher, department head, and has many years of teaching experience.
Eliminating tips and increasing the base wage is a stupid idea. All the talented servers who love the job will leave and mediocre people will replace them.
Having no required tips and a higher base wage works just fine in other countries. I think you're overstating your case.
What exactly are they going to leave for? What well paying skills is your daughter not putting to use so that she can help people get food?
except that most people -- including me -- hate it
raise prices by 20% and drop "mandatory" tips which is what they have become
then tipping can go back to what it was -- optional extra to reward excellent service, not an unspoken part of the bill
Why don't yall ask the tipped workers if they are happy or upset about having no tax on tips?
"Y'all" would be pretty silly to ask a question of little relevance.
Why wouldn't I ask them whether they were happy with their overall compensation, including health benefits, retirement, hours being scheduled, vacation or sick time.
Should I ask those in the back who may or may not be getting the tips from the table?
Tips are the most cynical thing I've ever seen.
Tips are supposed to be "in return for a service, beyond the compensation agreed on" (WordsAPI).
If tips instead mean "it's something you have to give when you had no problems with the service provided", and you expect routinely not to have problems with such service providers, then it's implicitly agreed that tips are required, so they are not tips anymore.
It’s simpler than that. It’s gross vote buying and political patronage. Nevada has a large population of tipped service workers. Trump won the state by the largest margin for a Republican since W. Bush in 2000 (back when the state was 65% non-hispanic white versus 45% today). It was probably instrumental in Trump winning hispanic men nationally.
“No Tax on Overtime” ditto. As I understand it if it’s overtime negotiated through a union contract, you’re out of luck.
All this is just the result of playing a zero sum game with industry that is traditionally very low margin. The money always comes from somewhere.
It is interesting that the no tax on tips would expire in 2028, while the tax breaks, most affecting the wealthy, were made permanent in the same bill. A bit of political game i'd say.
Also, "The maximum annual deduction is $25,000 for individuals."
Taxes are still being assessed, and tips over $500 a week won't have their tax refunded.
Some rhetoric during BBB debate was a side effect of a similar political game; cuts for "middle class" in the Tax Cuts and Jobs act from 8 years ago were due to expire, benefits for corporations were not.
"No tax of tips" is one of the most brilliant political ploys ever. You really gotta give Trump credit. It doesn't really cost anything, businesses love it, and you can trot it out as a victory for the working class while you screw them on their health care or energy costs.
Idk, tipping expectation is really unpopular, and anyone can see how this feeds it.
It’s not really, it’s the kind of thing that only a populist could do. If a Democrat did this, people would hate it for this very reason. This would just another “NeoLib” concoction to screw the working class.
Trump is a populist president.
People just don't recognize it because right-wing populism is a different breed than left-wing populism (the only one they have had exposure to).
Tariffs are a populist move as well. If you go look at Bernie's old website (pre-trump) he has a whole section about the importance of tariffs.
I’d honestly like to hear from someone who is a proponent of tipping how they think it makes any sense. By that I don’t mean I need the reason for tipping explained to my, everybody understands the argument for why you should tip: but how does it make sense when you consider who you tip and who you don’t?
Do you understand the part about how the tipped minimum wage being so much lower was born largely out of racism?
Even if that's true, what does that have to do with anything?
I’ve finally eliminated all tipping in my life for anything that isn’t sit down restaurant service or an uber ride, and I’ve stopped using delivery apps to instead just pick up food myself.
At first it feels shitty hitting 0 or “no tip” on a payment machine but after the first several times it feels empowering and I doubt employees give a shit anyway. Just do it.
I never understood tips...
You have a farmer that grows/raises food, butchers and others that 'process' it, you have a team of cooks who prepare/cook the food, and you're supposed to tip the the person who just brings the foor from the kitchen to your table, maybe 20, 30 meters away?!
Sadly, tipping is sprading all over europe too with POS terminals bothering you more and more often for tips.
I grew up in France and tipping in restaurants was definitely a thing, albeit on an entirely different scale than in the US.
Leaving a few francs (I'm not young) was common practice.
With cash payments growing more rare, and without the ability to tip easily with cards, maybe it became much less common.
That said, I don't disagree with your comment on how it's spreading. What I don't love about the terminals asking for tips is that, IMO, it creates an expectation of tipping that wasn't there before.
Now, in Portugal, we're starting to see cases of "here's the price with a 3€ tip (for example), if you want to pay that", and you awkwardly get to say "no thanks I want to pay the actual price", which I find very unpleasant.
On the other hand, we regularly eat out at a place near us that only takes cash. We usually spend about 18€ and I always leave the extra 2€ as a tip.
>Now, in Portugal, we're starting to see cases of "here's the price with a 3€ tip (for example), if you want to pay that", and you awkwardly get to say "no thanks I want to pay the actual price", which I find very unpleasant.
I've lived in Portugal for 30 years and I never had that happen to me. Where are you seeing this? I could only imagine it in a place that only serves tourists and foreigners.
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Bribing a driver in order to receive an order accurately seems archaic.
I’ll drive there myself, thanks. My pup gets a ride. The apps get the finger. The drivers get what they deserve.
Wins all around.
Stonk grants and options are tips too - no tax thanks.
I never put a tip in at a kiosk.
this is why we need to end this ridiculous tipping culture
It's also a joke, because anyone who's worked a service job knows there is no tax on cash tips (wink!)
Which made a difference 2 or 3 decades ago.
But today, who's getting tips in cash? Not many. Customers are paying for everything with credit cards or contactless, save for the occasional cash-only coffee shop or restaurant.
> who's getting tips in cash?
About half of the large tips at high end restaurants in my town are cash. Sounds like it is about a third in New York. Especially if it is folks who work at a restaurant.
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Exactly. My girlfriend who works in sales (sells food) in LA barely gets tips in cash. Most people use their cards. And thus, her tips are tax deductible.
tbf it's one of the few times i try to carry cash.
I just don't trust management of places not to take a cut if it's done digitally.
> But today, who's getting tips in cash?
Every server who waits on me.
I make it a point to carry cash and tip the waitstaff in cash even if I pay the bill on my credit card.
1) Tips on credit cards are a "dark pattern" meant to increase the house rake of the credit card handling companies.
2) Tips on credit cards are controlled by the owner and often never make it to the waitstaff.
I can short circuit this by giving my servers tips in cash.
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I should have specified that I live in the east-coast United States. Tap-to-pay is almost as common as someone writing you a paper check or an IOU, out here.
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I have an honest question: what's the cash vs card tip ratio? 99.999% of the time I am not carrying cash and I don't see many (any?) people paying with cash ANYWHERE in the last 10+ years.
At this point you are litterally a sucker to pay for anything in cash, because everything is marked-up to cover CC fees, which you get a portion of back in the form of rewards.
Yes, I know some places give cash discounts. Most do not.
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Almost no one can give you a good answer because it varies by business type and location.
My business does not involve tips (exactly) but I can tell you that I’ve seen anywhere from 20-40% of money run through my system being in cash, depending on where I am in the country.
in SF I only carry cash for dive bars and the occasional mom n pop diner
NYC here, whole lot of cash still showing up in tip jars - there are still and loads of cash-only places around, from bars, restaurants, to street carts, you name it. JG Melon, for instance, is famously cash only. But so too is the bar around the corner from my apartment (Dynaco, do recommend).
...So people often tend to be carrying cash still.
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Haha, I had the same thought but now basically everyone is digital so I think its a different ball game than we are used to. At least as a restaurant server/bartender.
Sounds like those Americans aren't paying their fair share.
The negligence of their national responsibility will be felt like an earthquake by millions of Americans. It's hard to imagine how they live with themselves.
When I worked as a waiter (many years ago), my pay check included tax withholding based on 8% of my tables for that pay period. This is driven by IRS rules: https://www.irs.gov/taxtopics/tc761#:~:text=If%20the%20total...
We had to declare our tips at the end of the night, and 10% was the lowest you could claim without needing manager approval. You can guess what everyone declared.
How about the tips that I get as a musician?
The IRS is going to publish a list of eligible occupations by years end.
like being president, and getting crypto tips from supportersuckers
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Do you report them?
Of course.
How is an expected tip different from a commission other than who pays?
This is rather brilliant. * make it look like the government is stealing “gifted” money * stop taxing it * turn as many jobs as possible into tipped jobs supposedly for the person’s benefit * really the employer wins since they’ll pay less and claim “tips”
Yeah we just had to sell out medicare, bomb Iran, destroy USAID, and now restaurant workers can blame the public more for their thief employers not paying them a living wage. I have happily nearly eliminated eating out partially because tipping has become ridiculous but restaurant prices are still very high post-pandemic. Fuck tipping.
Trump is clearly the most powerful president of all time, and he basically controls everything.
I worked as a server for about a year in college, and when we would check out at the end of the night, literally, everyone would just put zero. As in they didn't earn anything. Every time. I'm sure it mess with the taxes in someway or another.
I think with any conversation about tips it is really important to recognize that laws vary dramatically across states[0]. I think talking about this can really drive at the real underlying issues with tipping.
IMO most discussions about tipping are a distraction. "Divide and rule" if you will.
So the real (main) problem is actually just straight up good old wage theft. Anyone who is not getting at least minimum wage is suffering from wage theft.
I've heard stories of employees not getting a paycheck "because employer thought it was all tips" (illegal b/c they credited too much) or very small paychecks with the explanation that the employer over-credited tips. There's at least a decently straight-forward way to show what can be credited, and this is why there's the tip amount that you log. Ignoring cameras, the burden is on the employer to prove that they can make these credits, so that line-item on the bill is important (IANAL)
I think the entire discussion of tipping often only serves as a distraction to wage. Like there's a lot of person to person fighting of how much we should tip (including not tipping) and frankly, doesn't this discussion often boil down to wage theft? I mean ignoring the already illegal problem of wage theft, what makes a server (who gets tipped) any different from a cashier (who doesn't get tipped) as an employee. Their jobs differ in duties, but we're talking about wage and *fair pay* here. If all the laws are followed, a tipped employee strictly benefits from tips. They have a statistical wage but that wage is max(base_pay, state_minimum) + random_value.
So I think 90% of discussions around tipping end up just being a distraction to create a fictitious divide of "minimum wage workers" vs "tipped workers"[2] who should instead be working as a coalition to increase the floor. They are both minimum wage earners! The main difference is primarily that tipped employees are just more likely to suffer from wage theft, due to how they are paid. But that's also something that both experience, just at different rates.
[0] https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
[1] https://www.dol.gov/agencies/whd/fact-sheets/15-tipped-emplo...
[2] Simplifying by ignoring tipped earners with higher than min wage base pay (we can extend as needed)
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Another symptom, another op ed without any understanding. Usually I'd say something like: minimum wage equals minimum effort. Or: stealing from the corpos is morally justified. But in the light of things: GLORY TO CAPITALISM! You wanted it, you will get it, unlubed, long, and thick. So bend over, chumps, because you're in for a ride you're not ready for.
According to my accountant for my wife’s small business (nail and wax salon) this tax law change will have a significant positive impact on her staff. Not sure what to make of this article, it seems pretty disingenuous.
N=1. Just because your wife's business doesn't fall under the conditions that the article is talking about, it doesn't mean that her business is the norm.
Sure, my experience isn’t with sharing, basically. Nice.
I'm just planning on tipping less to make up for it. In California minimum wages are already $20/hr, and on top of that so many places expect a higher %ge, tip, just cutting my tip by the 10% they pay in tax and being done with it. I pay taxes on my wages. They should too
Two steps short of legal prostitution. Maybe the worst idea from the administration so far. Time to build the app…
I don't like tipping as much as the next guy, but this isn't about that. It's about government overreach and privacy.
Governments tracking small transactions like tips and taxing them should bother everyone. That rag, the New Yorker, knows that of course.