During campaign stops in Las Vegas, the two leading presidential candidates and their surrogates voiced support for ending taxes on tips. Vice President Kamala Harris and former President Donald Trump have each outlined similar proposals, but according to UNLV economist Stephen M. Miller, these initiatives remain unlikely to be implemented.
“Ending taxes on tips is unlikely to occur as there are too many problems with implementation,” Miller, who is also the director of research at UNLV’s Center for Business & Economic Research, informed Casino.org on Thursday. He identified several key issues: employers might take the opportunity to reduce paid wages since tips would no longer be taxed, many tip workers are low-income and may not pay federal income tax anyway, certain professions might find ways to convert regular income into tip income, it would be unfair to those not earning tip income, and it would result in a loss of revenue especially given the already existing trillion-dollar-plus deficits.
Both presidential candidates proposed this policy during their campaigns in Nevada, a state with a powerful presence of the Culinary Union, which represents hospitality workers and supports ending taxes on tips. Miller also provided context around some comments made by Acting Labor Secretary Julie Su during a visit to The Venetian in Las Vegas. Su voiced support for Harris, President Joe Biden, and labor unions, highlighting the Venetian’s first contract agreement with the Culinary Union.
“By supporting the right to organize, we’re seeing workers gain more power in the workplace,” Su said, adding that this has helped drive “a record recovery from the pandemic and is creating more prosperity overall.”
Miller explained that the federal government’s additional $600 per week unemployment insurance payments after the COVID pandemic led workers to take more time in job searching, with many moving to other sectors of the economy. “This precipitated a structural adjustment in the labor market that both workers and employers took some time to recognize. We see much more activity around unions declaring a strike if their demands are not met. Putting everything together, we can see a large shift in the bargaining positions of labor and management, moving toward labor and away from management. Real wages have been rising for over a year. Job benefits are improving in addition to pay.”
During her visit, Su also praised the contributions of immigrants to the economy, noting their crucial roles in hotels and restaurants. Miller responded by emphasizing that low pay in the United States is often sufficient to support immigrants and allow them to send remittances back to their home countries, where economic opportunities are scarcer. “Las Vegas has more than its share of such low-pay jobs,” he noted.
Su further stated that the Biden administration’s goal is for every job to be a good job, ideally unionized. Miller cautioned that many immigrants do not possess significant skill sets for the job market, meaning that focusing solely on ‘good’ jobs could exclude these workers. He noted that unions have been a declining share of the total workforce for decades and, despite the shift in bargaining power from employers to employees, this structural change is unlikely to spur significant union membership in the near term.
