On Aug. 10, Kamala Harris held a much-anticipated campaign rally at UNLV’s Thomas & Mack Center, her first in Las Vegas since becoming the heir-apparent of the Democratic Presidential nomination. The event went pretty much as one might expect: Nevada’s Congressional Democrats threw their support behind the ticket, Tim Walz delivered a high-energy sermon of a speech and Harris laid out all of the differences between her and Donald Trump. At this point in the Harris campaign, the chants of “We’re not going back” and “When we fight, we win” had become routine.
One thing, however, came as a surprise to everybody: Before a cheering crowd of more than 12,000, Harris declared she would support eliminating taxes on tips if elected to the presidency. What’s notable here is that Trump had already outlined this policy in his own economic agenda back in June. In other words, Harris stole his thunder, likely in an appeal to moderate voters who would have considered this then-Trump policy an important difference between the candidates and a reason to vote Republican in November.
Putting aside the speculation on political strategy, we must ask: Will UNLV students benefit from a “no tax on tips” policy? Even though both the Democratic and Republican nominee for president have already vowed their support for such a policy, it is still worth questioning if this should be a welcomed announcement.
The simple answer—the deceivingly simple answer—is yes, the policy does stand to benefit many students at UNLV. On paper, the reasoning is rather simple: If you’re a student who earns tips, and you have previously reported those tips to the IRS and they were taxed, then that money can theoretically-speaking go straight into your pockets. It is hard to say how much of an economic impact this could have since tipping is so volatile and dependent on the quality of customer service, or at least that is the unwritten rule. However, some professions receive tips more regularly than others, including bartenders, baristas, and hospitality workers. Under the proposed change in the tax code, these people could have more disposable income.
Alex Oles, a hospitality major at UNLV, says, “I’m all for it. I think both parties proposing policies against taxing tips will grow the hospitality industry, as it will drive more revenue towards frontline workers who need it.” Oles believes that more disposable income will result in more workers viewing the field favorably and entering that profession, thus expanding the industry. This has obvious benefits to Las Vegas, where hotels and casinos reign supreme.
William J. Robinson, an assistant professor of economics at UNLV, shares in that excitement, saying, “We’ve spent the last 20 years cutting taxes on the wealthy and raising them on wage earners; this has the potential to be hugely positive for thousands of workers in Nevada.” However, students should remain vigilant, as there are more considerations when it comes to the “no tax on tips” policy. Robinson warns that “the removal of taxes on tips could become a lever to not increase wages for tip earners.”
While the proposal might be a step in the right direction, students in low-wage professions should not let it distract them from pressing for more pay, which would arguably do more to improve their livelihoods. To the extent that the tax regime can be used to boost the common worker or diminish extreme inequality, policies should be much more targeted. The Child Tax Credit, for example, has a clear beneficiary, and it was shown to help low- and moderate-income households. In short, the proposed policy is fine for now, but real change needs to be forthcoming.
Another concern is that the policy could be manipulated to dodge taxes on incomes most people might not actually consider a tip. Let us leave the plotting to the white-collar criminal types. That said, no policy is air-tight; they all require enforcement from the appropriate government body, which in this case would be the IRS.
Finally, this goes as a reminder that students should be skeptical about dubious campaign promises. It is worth noting that the president does not have the authority to unilaterally change the federal tax code; only Congress can do that. It is also yet to be determined if such a plan is destined to fall by the wayside, forever pushed to the back of the priority list and hoped to be forgotten about. Again, the change will likely free up some disposable income, but UNLV students should view this move as a convenient carrot on a stick and, more than anything, the Harris campaign’s attempt to checkmate Trump.
