Nevada Dem congressman to introduce ‘no tax on tips,’ minimum wage hike bill
LAS VEGAS — A Democratic Congressman’s latest legislative gambit suggests the hottest Sin City bet isn’t at the gaming tables, but in the halls of Capitol Hill.
One expert said the tax-free payoff could hit five figures for some workers.
Rep. Steven Horsford (D-Nev.) said Tuesday he will introduce a bill to raise the federal minimum wage to $12 an hour for all workers — including those who rely on tips for services — and remove those tips from income tax assessments.
He plans to put the so-called “TIPS Act” forward as early as this month.
Horsford, whose northern Las Vegas district is home to many tipped workers at the city’s resorts, restaurants and casinos, went public with the proposal not even 72 hours after Vice President Kamala Harris said she’d back “no tax on tips,” an idea first voiced in Vegas by former President Donald Trump at a June 9 rally.
In November, the four-term incumbent faces former North Las Vegas mayor John Lee, a Democrat-turned-Republican who had previously backed Horsford.
Lee’s campaign website makes no mention of the tax-on-tips issue.
Eliminating income taxes on tips — a move supported by the Culinary Union Local 226, which has endorsed both Horsford and Harris in their races — would mean a windfall for many tipped workers, one tax authority said.
According to Tom O’Saben, director of Tax Content and Government Relations for the National Association of Tax Professionals, tipped workers could gain on average $20,000 to $30,000 in tax-free income each year if Horsford’s proposed act becomes law.
Another $1,500 or so could go back to workers if those tips are exempted from Social Security and Medicare assessments, he said.
Horsford, who chairs the Congressional Black Caucus, said his bill would end the “subminimum wage” that is as low as $2.13 an hour in many states.
The difference between that payment and the current federal hourly minimum of $7.25 is meant to be reconciled by tips, or by the employer if tipped earnings don’t cover the difference.
Horsford says the ultra-low minimum for tipped workers — allowed in 43 states but which Nevada and six others prohibit — “is really a relic of post-slavery America, which was designed to explode exploit recently freed slaves by avoiding having to pay them a livable wage.”
In a Zoom call, he told reporters “Nearly 6 million American workers, representing almost 6% of the workforce, rely on tips for most of their income.”
Of those 6 million, “a staggering 70% of these workers are women, often single mothers and women of color,” he continued.
The TIPS Act still needs to be fleshed out, the rep conceded. Asked about Social Security and Medicare tax provisions, Horsford said, “I’m working with tax counsel on that issue.”
He added that “guardrails” must be inserted in the measure to ensure people in other professions don’t reclassify normal wages as tips.
On the ground, those most likely to benefit from the policy are subdued about what it could mean to their checkbooks.
Seven Culinary Union members who assembled for a roundtable on the topic last week — before this bill was announced — refused to ballpark a dollar figure of the potential benefit.
One server, Tara Koroni, said dropping taxes on her tips, “would let me pay the interest on my student loans.”
One tax expert says taking tips out of the tax base could deal the country a losing hand.
Howard Gleckman, a senior fellow in the Urban-Brookings Tax Policy Center at the Urban Institute in Washington, told The Post he questions “why should a server get tax-free income when somebody else who’s doing difficult work for low wages … has to pay tax on what they make.”
Tipped workers who presently don’t make enough to pay federal taxes, he said, could lose out on the Earned Income Tax Credit and the Child Tax Credit.
Asked about those benefits, Horsford said “we’ll have to evaluate” how tipped income would be reported but not taxed, for those credits.
