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> Employees would also be taxed on the "tip" (which would now be included in their base salary) Tips are income already, and are taxed as such. You can get awa
by b3morales 5y ago
> Employees would also be taxed on the "tip" (which would now be included in their base salary)
Tips are income already, and are taxed as such. You can get away with not reporting it if it's a few extra bucks from a jar on a counter. But if you're a "tipped employee" (and thus eligible to be paid sub-minimum wage) you report them to your employer, who then reports them to the IRS, and does tax withholding same as for wages.
- tchaffee 5y agoThat's a naive understanding of what's really happening at most restaurants. Cash tips are almost always significantly under-reported. It's nowhere near as low as "tip jar on the counter" amounts.
- b3morales 5y agoYes, of course there is underreporting; nothing in my comment says otherwise. I'm not following your point. Since some people cheat on their taxes, they shouldn't be paid wages instead, because then they wouldn't be able to underreport as easily?
- tchaffee 5y agoMy point was that the under-reporting is in much larger amounts than your claim that "You can get away with not reporting it if it's a few extra bucks from a jar on a counter." > Since some people cheat on their taxes, they shouldn't be paid wages instead, because then they wouldn't be able to underreport as easily? How did you get this from what I said? I said nothing to that effect. Not even close. My point was very simple.