Donald Trump proposed eliminating taxes on tips a couple of months ago.
All of a sudden, Kamala Harris decides several days ago that she is also in favor of not taxing tips.
Notice the difference in how CBS News reports it for the two candidates.
Trump's plan is going to raise the deficit.
Kamala is fighting for workers.
In the meantime, Joe Biden has now suddenly decided he is also in favor of exempting tips from taxation.
However, a little over a year ago the Biden administration announced a plan to crack down on unreported tips to increase revenues collected by the IRS.
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| Source: https://www.irs.gov/newsroom/irs-introduces-new-service-industry-tip-reporting-program |
It was described by tax experts as a crack down on tips.
Of course, it should also not be forgotten that Kamala Harris was the deciding vote on passage of the so-called "Inflation Reduction Act" in August, 2022 that provided the authority and funding for the Internal Revenue Service to hire 87,000 new employees.
I wrote about all of that in a blog post at the time titled "I Didn't Eat The Cupcake...Or Vote To Send The IRS To Audit You".
Democrats spent a lot of time arguing that the additional IRS employees were only going to improve its technology and service.
However, the fact is that financial estimates in the bill were based on the IRS collecting an additional $200 billion in revenues from audit enforcement over the next 10 years in order to pay for the "Green New Deal" provisions in what was marketed as a bill to reduce inflation.
That law passed because Kamala Harris cast the deciding vote to break a 50-50 tie vote in the Senate.
How is that working out so far?
Let's just say it is off to slow start. Of course, the spending authorized in the bill is not.
$60 billion in new spending to expand the IRS has netted just $1 billion in new revenue so far.
Harris had also cast the deciding vote in 2021 to advance the $1.9 trillion Covid stimulus package that many economists cite as being the largest contributing factor to the inflation that followed.
In fact, Harris has cast more tie-breaking votes as Vice President than we have seen in over 200 years of American history.
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| Source: https://apnews.com/article/kamala-harris-senate-tiebreaker-vote-39a1a63fccbaec363262abad2f644562 |
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| Source: https://apnews.com/article/kamala-harris-senate-tiebreaker-vote-39a1a63fccbaec363262abad2f644562 |
Of course, it should not be a surprise that in each of those tie-breaking votes Kamala voted with the Democrats. Nary a hint of bipartisanship in all of those votes.
I certainly am not under the false illusion that Donald Trump proposed exempting the tax on tips for anything but for political purposes.
In that respect, it was a brilliant political chess move especially in a swing state such as Nevada in which so much of the economy revolves around service workers who rely on tips.
At the same time, there is a tax policy argument that supports not taxing tips.
Here is how I would argue for the exclusion of tips from income wearing my old hat as a tax attorney and CPA.
Tips have always been referred to as gratuities.
A gratuity is something given voluntarily without obligation.
Gifts are not taxable under the Internal Revenue Code.
The U.S. Supreme Court has defined a gift under I.R.C. §102 as "a transfer that proceeds from a detached and disinterested generosity, out of affection, respect, admiration, charity or like impulses."
It certainly can be argued that a gratuity in the form of a tip is a gift.
I would suggest that Trump would be on firmer legal ground in excluding tips from income by executive order than Biden is in cancelling student loan debt.
However, it would not seem Trump would have to do that.
There is now appears to be a rare bipartisan consensus emerging that tips should not be taxed that is agreed to by both Republicans and Democrats by a vote in Congress.
Trump is actually bringing the country together before he has even been elected! Who would have thought that was possible?
Beyond the media bias, what is really interesting is seeing Kamala and Biden follow Trump's lead on this.
It is as if Trump put a checkmate move on Harris and Biden.
Trump was clearly playing politics with his proposal.
However, Harris and Biden following his lead rises to the level of crass political pandering and hypocrisy on their part..
They are also brazenly reversing their prior positions on the taxation of tips .without the least amount of embarrassment.
This can only come when you know that the media has your back.
Trump's position on tips is also proving to be a brilliant political move as it also shows that Chameleon Kamala will say and do anything to get elected. It is all an act. There is no way you can know what she will really do as President.
In my opinion, this is the narrative and messaging Trump/Vance should keep using in the campaign to define Kamala Harris.
You cannot trust anything that Kamala Harris says. She will change her colors as she needs to get votes.
She portrayed herself as an Indian American get elected as a Senator in California and has plays up her Black heritage on the national scene.
She was co-sponsor of Bernie Sanders' Medicare for All plan as a Senator but says she now does not favor doing away with private health insurance.
She has been an open border advocate for years, and put in charge of the border by Biden while 10+ million entered the country illegally, and now says she knows how to fix the border.
She says she will bring grocery and gas prices down but she was the deciding vote on the bill that fueled all of it.
She called for Defunding the Police four years ago during the George Floyd riots and now portrays herself as being tough on crime.
Chameleon Kamala.
What can we also take from this?
There are leaders and there are followers.
Who is the leader here and who are the followers?
There are also those who are one step ahead of everybody else.
Who is that in this campaign?
There also might be a tip somewhere in all of this as to who is best fit to lead the country right now.
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