If you've left the United States for the summer holidays, you may have encountered a strange and refreshing custom: not tipping. Or at least not tipping everyone you meet.
Americans have long been among the top tippers in the world. “We tip more than any other country, and we tend to tip more than other countries.” says Michael Lynn, professor of consumer behavior at Cornell University's School of Hotel Administration whose research focuses on tips. “We are the most tolerant country with regards to tips.”
Just wait. America’s tipping culture is about to get even more intense. In a rare case of bipartisan agreement, presidential candidates Donald Trump and Kamala Harris are advocating exempting tips from federal income tax. It’s a popular stance among many potential voters, especially in Nevada, a key swing state whose casino, hotel and restaurant workers rely heavily on tips.
The idea would be bad news for customers, and perhaps even for tipped workers themselves.
Consumers are already tired of the way tipping expectations have expanded since the pandemic. As people cut back on restaurant dining to avoid COVID-19, increased the size of the tips They're gone, whether for dine-in, takeout or delivery. Meanwhile, retailers have turned to machines for cashless and contactless transactions.
Soon, the tip jars that once collected loose change at cash registers morphed into touchscreens that suggested significantly larger tip amounts, even for small purchases. Restaurants without waiter service (and cafes with takeout service) now feel pressure to tip.
TO Pew Research Center survey from last November It has been found that 72% of American adults believe that tipping is expected in more places than five years ago. One wonders how often the remaining 28% actually leave the house.
It's all a bit much. In February WalletHub SurveyThree out of four respondents said tipping has gotten out of hand. Tipping is not only a financial burden, it also creates psychological stress. Is tipping optional or expected? How much is enough? Am I a bad person if I say no?
Excluding tips from federal income tax could simplify employers' paperwork and eliminate the difference between easily traced credit card charges and cash gratuities, which often go unreported. The exemption could also allow employers to pay lower (taxed) wages, because workers would have the hope of keeping more of their tips (tax-free).
All of these factors would encourage more transactions to be made with real or virtual tip jars. If your barista, your tattoo artist and your masseuse all get tips, why not the cashier at the supermarket? dental hygienist What about the plumber? Tipping in those situations may seem strange, Even indecorous These days, tax-free income is hard to resist.
Vice President Harris has specified that the exemption would apply to “service and hospitality workers,” but they are not the only ones currently receiving tips. It is hard to imagine such limits surviving political pressure to include at least all tipped workers below a certain income threshold.
Either way, the proposal picks winners. To help all workers in low-paying jobs, presidential candidates could propose increasing the standard deduction or the earned income tax credit. That would be fairer. But the tip loophole isn't about an overall increase in take-home pay; it's about winning votes in Nevada.
Just like the tax credits that oil companies get for blend of ethanol and gasolinewhich subsidizes demand for Iowa corn, and makes tips tax-free, offering huge benefits to a concentrated group while spreading the costs across the general public. It is unlikely anyone would vote against A candidate because he fears the proliferation of tip jars, but workers who earn a lot of tips could vote for them.
If either proposal were to pass, the revenue the Treasury would forego would have to come from elsewhere, but that would be a “next year” problem — an unpleasant reality not destined to get much attention this fall or sway many votes in November.
That is why we see two such opposite candidates rushing to agree on this crazy plan. We can only hope that they will cancel each other out and that whoever is elected will abandon the idea.
Virginia Postrel is a contributing editor at TrabajosinProgress.co and write a newsletter in vpostrel.substack.comHis most recent book is “The Fabric of Civilization: How Textiles Created the World.”
