I presume if you are caught, the IRS or the court will hold you in the wrong for fraud and tax evasion. Because they get to interpret the law, not you.
> presume if you are caught, the IRS or the court will hold you in the wrong for fraud and tax evasion
What is the difference between a discretionary bonus and a tip? What if I add a tip line to my business invoices?
The best solution is an income and deduction limit, e.g. you can't claim if you earn more then 2x median wage ($85,600 [1]) and/or the deduction is capped at the greater of $10,000 and 20% of your AGI.
Without an income deduction, I assure you, I will figure out how to get tipped.
> The best solution is an income and deduction limit
You don't have to help them try to make it make sense, it isn't intended to make sense.
A completely sensible proposal is to lower taxes on the middle class. But that's also entirely uncontroversial and furthermore they repeatedly say it and then don't do it so no one believes them and therefore no one pays attention to them if they say that.
"No tax on tips" gets people excited because a) there are a lot of service workers (which is the point; that's a lot of votes) and b) anybody can see that it's a tax loophole so large that even non-service workers can concoct a way to get in on it, but c) they haven't heard it before and it sounds like the kind of thing that could pass, because it won't cost the government too much revenue if the only people getting it would be a couple of waitresses and they themselves who will, unlike other people, come up with an ingenious plan to use this to avoid paying taxes anymore.
In other words, it's a silly proposal with extremely high memetic fitness. Don't try to fix it, just realize that what working people actually want you to do is lower their taxes.
The 20% performance fee in the 2 and 20 for hedge fund managers can easily become a tip on their tax returns, but I dont expect they will be back at the table asking what they did so wrong that would deserve such a paltry tip.
JumpCrisscross|1 year ago
What is the difference between a discretionary bonus and a tip? What if I add a tip line to my business invoices?
The best solution is an income and deduction limit, e.g. you can't claim if you earn more then 2x median wage ($85,600 [1]) and/or the deduction is capped at the greater of $10,000 and 20% of your AGI.
Without an income deduction, I assure you, I will figure out how to get tipped.
[1] https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ...
AnthonyMouse|1 year ago
You don't have to help them try to make it make sense, it isn't intended to make sense.
A completely sensible proposal is to lower taxes on the middle class. But that's also entirely uncontroversial and furthermore they repeatedly say it and then don't do it so no one believes them and therefore no one pays attention to them if they say that.
"No tax on tips" gets people excited because a) there are a lot of service workers (which is the point; that's a lot of votes) and b) anybody can see that it's a tax loophole so large that even non-service workers can concoct a way to get in on it, but c) they haven't heard it before and it sounds like the kind of thing that could pass, because it won't cost the government too much revenue if the only people getting it would be a couple of waitresses and they themselves who will, unlike other people, come up with an ingenious plan to use this to avoid paying taxes anymore.
In other words, it's a silly proposal with extremely high memetic fitness. Don't try to fix it, just realize that what working people actually want you to do is lower their taxes.
basch|1 year ago
Wouldn't it make more sense to bump standard deduction to $85,600. If someone is making more than $85,600, they pay taxes whether its tips or not.
blitzar|1 year ago
quantified|1 year ago
deafpolygon|1 year ago
pas|1 year ago