The Left's Secret Repeal of No Taxes on Tips
Story by C. Jarrett Dieterle • 17h
What began as a campaign promise in Nevada became law this summer with the passage of the One Big Beautiful Bill Act: "No taxes on tips" is now nationwide. But even as pundits debate its merits, progressive cities are quietly undoing the tax cut—and few are noticing.
Progressive cities such as Washington, D.C., and Chicago have recently eliminated the tipped-wage credit, which lets employers pay tipped employees below minimum wage as long as tips filled the gap. Now, New York City is the next battleground in a push to mandate a one-size-fits-all minimum wage.
The campaign against the tipped-wage credit began before then-candidate Donald Trump floated "no taxes on tips," but few have considered how these ideas play out together. To see the consequences, look at what happened when D.C. scrapped the tipped-wage credit.
After D.C. repealed the credit—causing such a backlash that the city council has already voted to partially reverse the decision—servers reported tips falling from roughly 23 percent to 25 percent to 18 percent to 20 percent. Research from the Census Bureau shows that for every $1 increase in the mandated minimum wage for tipped workers, tips drop by about the same amount.
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