Income tax + payroll taxes + state income tax can easily total 40 percent, so a 12 point bump in tips is not a big disincentive to tax avoidance. And in NYC th

Income tax + payroll taxes + state income tax can easily total 40 percent, so a 12 point bump in tips is not a big disincentive to tax avoidance. And in NYC they have to pay city income tax on top of all that. (If the cabbie incorporates and maintains a business bank account and payrolls himself and files taxes correctly, he'll only be paying 15-25% on some fares. I'd be surprised if any significant number of cabbies bothered with this.)