LAS VEGAS (KTNV) — President Donald Trump credits his pledge to end taxes on tipped income with his victory in Nevada November, the first time he's ever won the Silver State in three elections.
And Rep. Steven Horsford, D-Nev., has a bill that would grant that tax relief to workers, albeit not exactly in the way Trump envisioned.
Horsford's bill — similar to one he introduced in the last Congress — would end taxes on tipped income. But it would include guardrails to ensure the bill isn't abused.
Most particularly, it would eliminate the federal sub-minimum wage, which can see workers paid as little as $2.13 per hour, with tips making up the difference between that and the actual minimum wage, currently $7.25 per hour. Nevada is one of just eight states that require tipped workers to be paid at or above the federal minimum wage.
Raises are a key part of Horsford's bill, which sets it apart from other legislation on the subject. But it's a provision Horsford says he feels passionately about.
"The people have the power, not the special interests in Washington," Horsford said after a roundtable at the Culinary Training Center, where he used to be CEO. "So if some special interest wants to come and say, 'Keep wages as low as $2.13 an hour,' I'm ready to have that fight."
In addition to eliminating taxes on tipped income, Horsford's bill would:
- Include a definition of tipped worker to prevent people who don't work for actual tips from taking advantage of the law to skirt taxes.
- Capping the tax benefit at $112,000, again, to prevent well-off people from characterizing things such as inheritance or stock commissions as tax-free tips.
- Continue to withdraw Social Security taxes on tipped income, so workers wouldn't see a reduction in benefits when they retire.
With Republicans in charge of both the House and Senate, Horsford knows a Democratic bill is a harder sell. But he's counting on Trump's campaign trail promise — one he repeated during a visit to Las Vegas in January — to give his bill a boost.
"If he's serious, I'm ready to meet with you, Mr. President," Horsford said at the roundtable. "If they're [Republicans] serious, I'm open to meeting with them, working with them and getting it right."
In fact, Horsford said, he's working with Rep. Vern Buchanan, R-Fla., who has a no-tax-on-tips bill that has some elements similar to Horsford's.
Horsford, the only Nevadan on the tax-writing House Ways & Means Committee, introduced a similar measure in the last Congress, but it didn't pass.
While at the roundtable, Horsford heard from Culinary Union Local 226 members about their struggles, fielding questions ranging from the effect of the bill on proof-of-income for mortgage and credit applications to patrons failing to tip if wages are raised to the effects of lost tax revenue on the government, and how officials might seek to make up the shortfall.
Courtney Ellis, a food server at the Cosmopolitan hotel-casino, said she abides by the IRS estimates of what tipped workers make — called "tip compliance" — even though she sometimes earns less in reality.
"But it is very frustrating by the end of the year because I stay in tip compliance because I don't want to get audited," she said. "And so I feel like I'm in a choke hold when it comes to this because I don't want to get off of it because if I claim it myself, then I get audited, and I have to prove every single penny. And then they're going to try taking even more from me. But it would be thousands of dollars [saved by the no-tax bill] I know that for sure."
And Eileen Scott, a cocktail server at Harrah's, said the extra money would definitely help.
"Oh, the impact would be great," she said, "Even if this means buying groceries, more groceries, paying a couple of the bills that you weren't able to. I look at my check now, and I look at how much they say that came out in tips, and it's just like, really? I didn't see that. But just having that extra funds would go a long way for all of us, taking care of our family."
Asked about the political headwinds, Horsford said tipped workers calling their representatives would help the bill move.
"What I want to say to the people here in Las Vegas is, you matter," Horsford said. "Your voice in this matters. The more the people demand action on this issue, it's our job as your representatives to listen. So call your member of Congress, call your United States senator and tell them to get on the TIPS Act and to make sure that we get this right for workers."
