President Donald Trump's proposal to eliminate federal taxes on tips has ignited a significant debate within the U.S. restaurant industry. The National Restaurant Association supports the measure, believing it could benefit over 2 million servers and bartenders.
However, the Independent Restaurant Coalition and some workers express concerns that the proposal overlooks the broader workforce, including untipped kitchen staff. Critics fear the plan might exacerbate wage disparities by favoring tipped roles and discouraging fair base wages.
Alternative compensation models, such as service charges shared among all employees, are proposed by some industry figures, like Idaho restaurant owner George Skandalos, who advocate for tax exemptions on these charges. A competing bill from Rep. Steven Horsford proposes tax-free tips and a minimum wage of $7.25 per hour for all workers.
While the 'no tax on tips' proposal enjoys bipartisan support, opponents argue it fails to address underlying issues like low base pay and inconsistent tip income. The debate continues as stakeholders seek a solution that addresses the needs of all restaurant workers.