Taxes on Tips, Overtime and Social Security

CarlSpackler

CarlSpackler

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I have seen taxes in the news recently. One of the things that's getting discussed is whether there should be taxes on tips, overtime and social security. When I read that, I felt like I was back to my childhood, reading about which of these things is not like the other. I don't think there should be taxes on Social Security. I could support no taxes on overtime, but it doesn't make sense to me. Taxes on Tips seems to not fit all for me. If a person makes 2.00 an hour "salary" and $30/hour from tips, why wouldn't that be taxed. If someone flips burgers for 20/hour, why would they pay more taxes than the bartender who is making 35/hour? I'm sure I'm just missing something, but it doesn't seem to make sense on the surface.
 
SS was created to assist those most vulnerable by providing some security for the elderly, disabled and those unable to care for themselves due to a deceased family member. People that already have a healthy income, even in retirement, were never the intended recipients for SS benefits.

Thus, if you make over a certain threshold, naturally those benefits would incur some tax.

I'm trying to understand where this starts to become unfair, but I haven't come up with any reasons.
 
CallMeTyler said:
SS was created to assist those most vulnerable by providing some security for the elderly, disabled and those unable to care for themselves due to a deceased family member. People that already have a healthy income, even in retirement, were never the intended recipients for SS benefits.

Thus, if you make over a certain threshold, naturally those benefits would incur some tax.

I'm trying to understand where this starts to become unfair, but I haven't come up with any reasons.
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How about taxes on Tips?
 
Average tips in the US equal about $15/hour. That brings an annual income to just over $31k/year. That's just a hair above the threshold for lower income earners in the US.

Why would I want to tax folks riding the line on low income earners who barely cover the margins for surviving in our modern economy? I'm taking pennies on the dollar to barely move the needle. it just doesn't really hold up to a what I would consider smart policy.
 
Just like income brackets there can be tip brackets.

Having known someone who waited the Angus Barn her whole life and retired to her beach front cottage I can relate to taxing tips. At the same time the folks at Snoopy's Hot Dogs aren't raking in the cash so there's that.
 
Does the iRS presently get "salary" versus "tip "information??
I have no idea
 
My uneducated problem with the taxes on tips part is the hypothetical that hedge fund managers (or similar) could dodge taxes by only working for "tips".
 
I'm in favor of moving our tax system from regressive to progressive, but not in favor of doing it so radically unevenly.

What is the point of advantaging servers and baristas while not advantaging janitors and landscapers? What's the point of advantaging a unionized autoworker, but not an assistant manager at Arby's? What's the point of advantaging a retired couple, but not a newly married one with one kid already an another on the way?

If we're going to do this, let's just be open and honest with each other and do it already and quit playing these cutesy games.
 
Ddseddse said:
I'm in favor of moving our tax system from regressive to progressive, but not in favor of doing it so radically unevenly.

What is the point of advantaging servers and baristas while not advantaging janitors and landscapers? What's the point of advantaging a unionized autoworker, but not an assistant manager at Arby's? What's the point of advantaging a retired couple, but not a newly married one with one kid already an another on the way?

If we're going to do this, let's just be open and honest with each other and do it already and quit playing these cutesy games.
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I agree with this. Just make sensible progressive tax policy that recognizes lower income earners of all stripes need fewer burdens. These individual carve outs are nothing more than vote pandering. Which gets me to the most outlandish one of all, when Trump states no tax on overtime. He's already come out against overtime more than once in just the last month. Workers are much more likely to get a policy that bans overtime pay than one that removes taxes on it with Trump.
 
CallMeTyler said:
Average tips in the US equal about $15/hour. That brings an annual income to just over $31k/year. That's just a hair above the threshold for lower income earners in the US.

Why would I want to tax folks riding the line on low income earners who barely cover the margins for surviving in our modern economy? I'm taking pennies on the dollar to barely move the needle. it just doesn't really hold up to a what I would consider smart policy.
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How about raising the threshold for everyone?
 
Enigma94 said:
I agree with this. Just make sensible progressive tax policy that recognizes lower income earners of all stripes need fewer burdens. These individual carve outs are nothing more than vote pandering. Which gets me to the most outlandish one of all, when Trump states no tax on overtime. He's already come out against overtime more than once in just the last month. Workers are much more likely to get a policy that bans overtime pay than one that removes taxes on it with Trump.
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I feel the same way. These carve outs seem pretty popular, and I think this tipping thing has something like 75% approval but I can't understand why. It means other people that aren't getting tips will end up paying more.

Tippers already get a pretty good tax Dodge by almost universally not reporting cash tips but I guess that's much less of a benefit than it used to be with more people using credit cards.
 
gregh1 said:
Tips (including cash tips) are supposed to be reported as income - this is why lots of folks prefer cash, since it is easy to under-report.
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I mean are they reported separately-if not how can we "not tax" tips. Im just thinking of the mechanics of identifying what "not to tax"
Likewise we do not segregate "overtime" income in our present tax reporting ? Correct?
 
Ddseddse said:
If we're going to do this, let's just be open and honest with each other and do it already and quit playing these cutesy games.
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This. I'm a tax professional and have discussed the no tax on tips proposals with a colleague that is on the opposite side of the political spectrum. And we are in complete alignment on this issue - no tax on tips is horrible tax policy. It would be ripe for abuse, it would be an administrative nightmare, and it would be inequitable. Some serious guardrails would be required to prevent abuse, and that means additional complexity. If we as a country want to put more money in the pockets of low-income hourly workers, there are more direct and efficient means of doing so. Brackets, rates, refundable credits.
 
Ddseddse said:
I'm in favor of moving our tax system from regressive to progressive, but not in favor of doing it so radically unevenly.

What is the point of advantaging servers and baristas while not advantaging janitors and landscapers? What's the point of advantaging a unionized autoworker, but not an assistant manager at Arby's? What's the point of advantaging a retired couple, but not a newly married one with one kid already an another on the way?

If we're going to do this, let's just be open and honest with each other and do it already and quit playing these cutesy games.
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Cutesy games are the only way Trump can thread the needle of looking like he is for putting more money in worker’s pockets while also being in favor of all the policies that have led to the immiseration of the American worker.

That’s why Dems need to just come out in favor of simple policies that show these dumb schemes for what they are. Just increase taxes on the wealthy and raise the minimum wage. But we know Trump can’t say that and won’t do it, and we know the Democrats are too afraid of the donor class to do it either.
gtyellowjacket said:
I feel the same way. These carve outs seem pretty popular, and I think this tipping thing has something like 75% approval but I can't understand why. It means other people that aren't getting tips will end up paying more.

Tippers already get a pretty good tax Dodge by almost universally not reporting cash tips but I guess that's much less of a benefit than it used to be with more people using credit cards.
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i think it’s popular because the Democrats aren’t really presenting the alternative. People see Trump advocating more money in their paycheck and that’s it. Americans already don’t see the benefits of their tax dollars and have been conditioned to hate taxes by the politics of the last 30-40 years.
 
TangledUpInBlue06 said:
This. I'm a tax professional and have discussed the no tax on tips proposals with a colleague that is on the opposite side of the political spectrum. And we are in complete alignment on this issue - no tax on tips is horrible tax policy. It would be ripe for abuse, it would be an administrative nightmare, and it would be inequitable. Some serious guardrails would be required to prevent abuse, and that means additional complexity. If we as a country want to put more money in the pockets of low-income hourly workers, there are more direct and efficient means of doing so. Brackets, rates, refundable credits.
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Thanks for your insight Its a phony yack yack trump is espousing
 
Reduce taxes on tips. Remove taxes on SS (paying tax on a tax)

Remove tax benefits for hedge fund managers.

Return personal exemptions ($5000/person) Los sent us into a higher tax bracket - I've had to pay an aggregate of $30,000 more taxes after 2017.)

Reduce Standard deduction from $27,500 to $20,000). This encourages buying a home

Restore tax breaks for truckers, small business, home business/work

Restore tax breaks for disability

Establish a minimum tax for large corporations, individuals making more than $1M/year. Establish a linked fund for Infrastructure, FEMA


"Make the tax laws fair again."
 
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