During his Congressional career Campaign for Liberty Chairman Ron Paul championed repealing all federal taxes on tips. Since this simple act would increase the wages of millions of working Americans, one might think that President Obama might embrace this proposal. After all, he is making "reducing income inequality" the centerpiece of his agenda this year.
However, the President has not only refused to support repealing, or even reducing, taxes on tips, but his IRS is actually proposing to raise taxes on tips! According to a story from Watchdog.org:
A change in tax policy implemented Jan. 1 will prevent restaurant workers from collecting automatic gratuities — the added 18 percent fee many restaurants charge to groups of eight or more — as part of their tips. Instead, that added fee will be included in their payroll, meaning workers have to wait up to two weeks to get that extra cash and must pay additional taxes on it.
It means less money in servers’ pockets and more for the federal government.
Some restaurants are responding to this change by no longer automatically adding the tip to large parties. This could lead to reduced tips for waiters and waitress serving large parities--and thus reduce their income. Congress can stop this regulation so please call your Representative and Senators and ask they stand up for working Americans by repealing Obama’s tax increase on tips.
Tags: Taxes, Obama