Will Trump’s tip tax promise move the needle in Nevada?
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Will Trump’s tip tax promise move the needle in Nevada?

Former President Donald Trump is trying to influence voters in Nevada by promising to eliminate tip taxes if elected, but it’s unclear whether that promise will help him win the state in November.

Trump’s surprise announcement came during a Sunday rally in Las Vegas and was seen as a direct appeal to voters in the state because Nevada’s economy is driven by tourism thanks to gambling and entertainment venues in Las Vegas and Reno.

“This is the first time I’ve said this, but hotel workers and tipped people will be very happy,” Trump said. “When I take office, we will not collect taxes on tips – from people who tip.”

Some strategists and advisers agree that Trump’s promise of tax-free tips will help move the needle in the Silver State.

“This is a politically powerful move by Trump because it is as direct, unambiguous and as transactional as possible,” said Kevin Madden, a senior adviser to Mitt Romney’s 2012 presidential campaign. “For all this talk about ‘campaigning in poetry and governing in prose,’ Trump just goes straight to the ‘elect me and I will give you what you want’ part.”

The promise also attacks President Joe Biden’s weaknesses: the economy and the cost of living.

“Politically, anything that can impact the margins counts in this extremely close election,” said Republican strategist Christian Ferry. “In a situation where economic concerns dominate public opinion, such a targeted appeal to a smaller group of voters makes sense. This has a direct impact on the wallets of these voters; that makes it meaningful to them.”

Practical questions remain, perhaps most notably whether Trump will be able to keep his promise even if elected because the president has no authority to influence taxation of tip income. The Trump campaign said Washington Examiner that he plans to ask Congress to make the change, adding that Biden has “aggressively increased the IRS rate by going after tipped workers,” referring to the expansion of the IRS under Biden’s Inflation Reduction Act.

The White House has previously denied that the IRS expansion would affect people earning less than $400,000 a year.

Politically, however, the Trump campaign hopes that a pledge to eliminate the tipped income tax will push him over the edge. Since 2008, Nevada has lost in every election since 2008, and in 2020, Biden won it by just over 30,000 votes, although Trump has a lead of about 5 points in the election Real clear policy average votes in this year’s elections.

The Biden campaign, in turn, has pushed for raising the tipped minimum wage to bring it in line with the regular minimum wage and for raising the minimum wage overall. However, any income earned on an hourly basis will be taxable.

Service industry unions like the Service Employees International Union have a large presence in Nevada and rallied against Trump before his appearance.

“For decades, the Culinary Union has fought for the rights of tipped workers and against unfair taxation,” Culinary Union Secretary-Treasurer Ted Pappageorge said of Trump’s proposal. “Help is definitely needed for tip earners, but Nevada workers are smart enough to know the difference between real solutions and crazy campaign promises made by a convicted felon.”

If Trump is re-elected to office, he will have a chance to oversee how congressional lawmakers change tax policy after most of the former president’s tax laws expire in 2025. If the GOP can maintain a majority in the House and flip the Senate, Trump could have a better shot at seeing how service guidance legislation has been passed.

Gerald Friedman, an economics professor at the University of Massachusetts at Amherst, said the idea’s real-world impact would not be large even if the policy goes into effect.

“Tipped wages are already depressed. There’s a lot of fraud going on there because it’s one of the places where there’s a lot of cash,” he said. “People should pay taxes on their income. It can be argued that waiters and waitresses are low paid and therefore also have a low tax rate. However, the basic principle is that you must pay taxes regardless of your income.”

Friedman explained that because tipped workers typically don’t earn very high incomes, they typically don’t pay much in income taxes, which means the impact on both them and federal coffers won’t be large.

However, this does not mean that it will not have an impact on the course of the campaign.

Earlier during the same Sunday rally, Trump said the Democratic Party is banking on open borders and high tax rates knowing they “can’t get elected that way, so they make up stories,” referring to the report Trump called service workers, who buried World War I “suckers” in the cemetery and that the cemetery was “full of losers,” something Biden sometimes mentions during the campaign.

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Trump then made his own promise to cut taxes for service workers in Nevada.

“People who work in restaurants, no matter what the job is, whether they tip, we will no longer go after them for taxes,” Trump said. “I announced it for the first time, the first time I mentioned it, the first time anyone mentioned it. I don’t think this topic has ever been discussed before, and I think it’s very appropriate.”