If you've left the United States for a summer vacation, you’ll have come across an odd and refreshing custom: not tipping. Or no less than not tipping everyone in sight.
Americans have long been amongst essentially the most generous tippers on the earth. “We tip more professions than any other country, and we tend to tip higher amounts than other countries,” says Michael Lynn, a professor of consumer behavior at Cornell University's School of Hotel Administration whose research focuses on tipping. “We're basically the most generous tipper country anywhere.”
Just wait and see. The tipping culture in America is about to get much more intense. In a rare case of bipartisan unity, presidential candidates Donald Trump and Kamala Harris are advocating for exempting suggestions from federal income taxes. That stance is popular with many potential voters, especially in Nevada, a swing state where many casino, hotel and restaurant employees rely heavily on suggestions.
This idea could be bad news for purchasers – and maybe even for tipped employees.
Consumers are already uninterested in the rise in tipping for the reason that pandemic. As people limited their restaurant visits because of COVID-19, they increased the quantity of suggestions they gave whether or not they ate in, ordered takeout or received delivery. At the identical time, businesses moved toward machines for cashless, contactless transactions.
Soon, tip jars, which were once used to gather change on the checkout, were transformed into touchscreens that suggested much higher tip amounts even for small purchases. In self-service restaurants – and take-out cafes – there may be now pressure to tip.
A Pew Research Center poll last November found that 72% of U.S. adults imagine tipping is anticipated in additional places than it was five years ago. It makes you wonder how often the opposite 28% leave the home.
It's all a bit much. In a February WalletHub survey, three out of 4 respondents said tipping was uncontrolled. Tipping isn't only a financial burden. It also creates psychological stress. Is tipping optional or expected? How much is enough? Am I a foul person if I say no?
Excluding suggestions from federal income tax could simplify paperwork for employers and eliminate the difference between easily traced bank card statements and money payouts that always go unreported. The exemption could also allow employers to pay lower (taxable) wages, since employees could hope to maintain more (untaxed) suggestions.
All of those aspects would encourage much more transactions using real or virtual tip jars. If your barista, your tattoo artist and your massage therapist get suggestions, why not the supermarket cashier, the dental hygienist and the plumber? Tipping in such situations could appear odd, even inappropriate, today, but tax-free income is difficult to withstand.
Vice President Harris has made it clear that the exemption is meant to use to “service and hospitality workers,” but they should not the one ones who currently receive suggestions. It is difficult to assume that these limits will withstand political pressure to no less than include all tipped employees below a certain income threshold.
Either way, nevertheless, the proposal will produce winners. To help all low-income earners, presidential candidates could propose increasing the fundamental exemption or the earned income tax credit. That could be fairer. But the tip gap isn’t about an overall increase in take-home pay; it's about winning votes in Nevada.
If either proposal were to be implemented, the Treasury would have to seek out the lost revenue from someplace else. But that may be a “next year's” problem, an unpleasant reality that’s unlikely to draw much attention this fall or sway many votes in November.
So we see two fiercely opposed candidates unexpectedly agreeing to this crazy plan. We can only hope that they cancel one another out and that whoever is elected drops the thought.
Virginia Postrel is a contributing editor at WorksinProgress.co. ©2024 Los Angeles Times. Distributed by Tribune Content Agency.
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