| |
[an error occurred while processing this directive]
[an error occurred while processing this directive]
[an error occurred while processing this directive]
|
[an error occurred while processing this directive]
|
|
|
Guest Commentary: March 28, 2001
Call a Tip What It Is: A Gift
The Honorable Duncan Hunter (R-CA)
|
Today I am introducing a bill that will benefit millions of Americans directly, substantially and quickly, including most notably single mothers and students. Furthermore, this legislation will lift some of the heavy burden of government off thousands of small businesses.
My bill is very simple. It calls a tip what it is: a gift. All tips given, not to exceed $10,000 annually, would be tax free. This puts hundreds of dollars a month back where it belongs, with the individual who earned it.
Those who work in the service sector, who rely principally on tips to supplement their income, work in a system transacted largely in cash. Accounting for small amounts of cash for income tax purposes is not only unworkable, it is unenforceable, even if a paperwork scheme could somehow be conceived. Small amounts of cash, received through hundreds and hundreds of transactions, and almost never while standing behind a cash register, should not be taxable. Washington bureaucrats lack an understanding as to just how impractical the present system is to all those who labor so hard for their tips . The system simply breaks down.
Tips cannot possibly be reported accurately, and law-abiding citizens who work for tips do not wish to be labeled cheaters by people who don't understand the realities of their work. It is time to change that. My bill caps the tax-free earnings of those who make waiting on tables a career in high-end restaurants and resorts, at $10,000. But for the 95% of those in the service sector who receive tips , it's time to change the tax law covering income from tips .
Under current law, service employees who typically earn tips are assumed to have made at least 8 percent of their gross sales in tips . This tax is applied regardless of the actual level of the tip. Further, if the service personnel earns more than 8 percent in tips they are expected to report them accordingly. The end result for these employees, many of whose base salaries do not exceed minimum wage, is that they may have to pay taxes on income they didn't receive.
In addition, accounting for tips and gross sales is a burden on every restaurant, bar or other small business whose employees are regularly tipped. They are constantly under threat of an audit, where the IRS will hold their business responsible if the agency determines tip skimming to have occurred.
By putting in place a reasonable annual cap and strictly defining a tip, this tax relief bill is clearly focused on low- to middle-income households. According to the industries involved, most of the employees that will be helped are either students or single mothers. In addition, most of the employees are at the beginning of their careers.
Those in the service sector who rely on tips to supplement their income are a special breed of people. Those who work for tips see a direct relationship between effort and reward like few others. Night after night, day after day, weekend after weekend, the millions of bell hops, valet parking attendants, coat checkers, taxi drivers, hairdressers, bartenders, waiters and waitresses are on the job, working hard and providing vital services to people of every walk of life.
Let us give a break to those who labor so hard for their living. Let's show them for a change that the Federal Government is not so out of touch and understands the special needs of those at the beginning of their career. The time has come for government to get out of the way of our Nation's most prolific entrepreneurs, service personnel and their employers.
Note: This column has been adapted from a speech Rep. Hunter delivered on the floor of the House, March 28, 2001.
 How to contact Rep. Duncan Hunter (R-CA)
Reading a past guest commentary? Click here for the most current one.
|
|
|
[an error occurred while processing this directive]
|
