WASHINGTON 性视界传媒 After working as a restaurant host and server, Joel Almanza gave bartending a try 15 years ago and fell in love with the role of making drinks and chatting with customers.
Like a lot of Texans in the restaurant industry, most of Almanza性视界传媒檚 earnings come from customer tips.
性视界传媒淵our tips are pretty much your salary,性视界传媒 said Almanza, a bartender at Fish City Grill in Dallas性视界传媒 Preston Oaks shopping center.
What to do about tips 性视界传媒 and the millions of Americans who depend on them 性视界传媒 has been a central political issue since President Donald Trump made eliminating taxes on tips a theme of his presidential campaign.
The idea has provoked a lively discussion on helping a key group of workers, the impact for the federal budget and the wisdom of giving one type of employee an advantage not available to others.
U.S. Sen. Ted Cruz, R-Texas, has taken up Trump性视界传媒檚 cause, introducing legislation that would turn 性视界传媒渘o tax on tips性视界传媒 into law.
Cruz predicted the policy would become law by the end of the year. His legislation has the support of both Senate Democrats representing Nevada, which has a disproportionately high percentage of tip-dependent workers.
性视界传媒淭his policy is an incredible embodiment of the most important political transformation of the last decade, which is that Republicans have become a blue-collar party,性视界传媒 Cruz said recently on his podcast. 性视界传媒淲e are the party of waiters and waitresses and working men and women.性视界传媒
Skeptics on different sides of the ideological spectrum have questioned the wisdom of singling out a narrow category of workers for a tax exemption. Republicans crafting their flagship tax bill are weighing which proposals to prioritize, from a business tax break for research and development to lifting a cap on deductions for state and local taxes.
Cruz性视界传媒檚 proposal has significant implications for service industry workers in Texas.
Many Texas servers make the minimum cash wage of $2.13 per hour. Bartenders tend to make a few dollars more per hour.
Almanza, named the metro area性视界传媒檚 best Hispanic bartender last year by the Dallas-based Latino Culinary Institute and Association, estimated tips for servers and bartenders average $150 to $250 per night, depending on the level of traffic and type of establishment.
An illustration of the dynamic comes when servers receive a 性视界传媒減aycheck性视界传媒 for no money, he said. It serves only as a record of what they made because the amount of tax withheld exceeds what they earned in regular wages.
Almanza said the potential tax savings would partly offset the impact of inflation, helping him put more money toward his mortgage and two car loans. He and his wife could take an extra trip with their two young sons.
性视界传媒淲hat kind of person that works in the service industry won性视界传媒檛 like that?性视界传媒 Almanza said. 性视界传媒淚t性视界传媒檚 going to be beneficial. But also there性视界传媒檚 always the small print that you性视界传媒檝e got to read and what are the consequences? We just don性视界传媒檛 know yet.性视界传媒
Cruz性视界传媒檚 legislation would let workers deduct up to $25,000 in cash tips from their federal income taxes. Workers 性视界传媒 and their employers 性视界传媒- would still be responsible for payroll taxes for Social Security and Medicare.
Workers would not be required to itemize to claim the deduction, which could be stacked on top of the standard deduction.
According to the Bureau of Labor Statistics, Texas has more than 202,000 servers who wait tables, including more than 59,000 in the Dallas-Fort Worth area. Many other industries rely on tips as well, including valet services and beauty salons.
Emily Williams Knight is president and CEO of the Texas Restaurant Association, which supports the Cruz bill. Knight said it would help restaurant employees keep more of their 性视界传媒減erformance based earnings to invest in their families, their communities, and our economy.性视界传媒
Cruz性视界传媒檚 proposal would require employees to continue reporting their tips and contribute to payroll taxes, provisions that help workers apply for credit and receive retirement benefits, Knight said.
性视界传媒淲ith many restaurants struggling due to sky-high costs and cash-strapped consumers, it性视界传媒檚 critical that Congress pass a tax package that empowers restaurant employees and the businesses on which they rely,性视界传媒 Knight said in a statement.
Several fellows at the American Enterprise Institute, a center-right think tank, panned the idea of tip exemption last summer, saying in an online post it would be unfair because a waiter and a house painter with identical income could face starkly different tax burdens.
They said exempting tips from income tax would add complexity to the tax code and reduce federal revenue by at least $100 billion over ten years.
性视界传媒淭his policy has obvious political appeal to bartenders, waitstaff, hairdressers, Uber drivers, and others, but it is not good tax policy,性视界传媒 they said.
Tanner Agar, who co-owns Dallas restaurant Rye, said he supports tax breaks for restaurant workers.
Agar said half his employees work on tips. The policy change would have a big impact on them, but he has questions about what happens to the other half of his workforce, including kitchen staff.
He questioned whether mixing a drink is such different work than preparing food in the kitchen and wondered whether other changes to the tax code could have broader benefits for all workers in the industry.
性视界传媒淲hat happens when my hourly employees want to move to the front because they can save two grand on taxes a year? What happens if people don性视界传媒檛 want to cook anymore?性视界传媒 Agar said.
性视界传媒淚性视界传媒檓 concerned about people pushing through policy that性视界传媒檚 splashy and popular while not having the details required to be effective and organized,性视界传媒 he said.
U.S. Rep. Chip Roy, R-Austin, has posed questions about the policy and whether it represents equitable treatment for all employees. He favors low tax rates across the board and said he has questions about the consequences of exempting tips from taxes.
性视界传媒淚 support trying to deliver on the idea of tax relief for hard-working Americans, which include people who are tipped,性视界传媒 Roy said. 性视界传媒淚 think we need to think through all of the implications of those policies.性视界传媒
