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> tips are tax-advantaged (there's no sales tax on the tip) Someone please correct me if I'm wrong, but the bigger tax that's avoided here is corporate taxes,
by dataflow 2y ago
> tips are tax-advantaged (there's no sales tax on the tip)
Someone please correct me if I'm wrong, but the bigger tax that's avoided here is corporate taxes, I think. The tip goes directly to the employee, and it's thus not taxed as corporate income, is my understanding.
EDIT: Ah, I missed that corporate taxes were on net earnings rather than gross, so this wouldn't make any difference. Thank you!
- hattmall 2y agoNo wages are deducted so they don't pay income taxes on them anyway.
- atmavatar 2y agoThe primary corporate advantages to tips is they allow the business to display artificially low prices to customers (since they don't include the tip) and pay artificially low wages to employees (tipped jobs have a lower minimum wage).
- ac29 2y ago> tipped jobs have a lower minimum wage This isnt true in Alaska, California, Minnesota, Montana, Nevada, Oregon, or Washington. And in the states where it is true, the employee is still required to be paid at least the full minimum wage inclusive of tips.