Horsford: If you like no tax on tips, you should love banning subminimum wages for tipped workers

Culinary Workers Union Local 226 members and a Nevada congressman hope to capitalize on a popular proposal to eliminate taxes on tips and push for a federal ban on letting employers pay tipped workers subminimum wages.  

Former President Donald Trump, the Republican nominee for president, proposed getting rid of taxes on tips during a June rally in Southern Nevada. 

The Culinary, which traditionally supports Democrats politically, initially dismissed Trump’s suggestion as a stunt, though they agree tips should not be taxed.

In Las Vegas Saturday, Vice President Kamala Harris, the Democratic presidential nominee,  said she supports ending taxation on tip, and also raising the minimum wage.  The union endorsed Harris ahead of her visit.

At an event last week with Nevada Rep. Steven Horsford, Culinary officials as well as the congressman said that if Trump really wanted to help tipped employees, he would be advocating for elimination of the federal subminimum wage for tipped workers.

Nevada along with Alaska, California, Minnesota, Montana, Oregon and Washington have banned subminimum wage for tipped workers. But in some states the federally allowed minimum wage for tipped workers is as small as $2.13 an hour. The federal minimum wage for all other workers is $7.25.

Horsford said he is working with House colleagues to draft a measure addressing the subminimum wage on a federal level. 

“We need to reform it,” he said. “We need to end it … On top of that, we need to address the tax policy (on tips)  so it’s fair and equitable.”

The Trump campaign did not respond to a request about Trump’s position on eliminating the federal subminimum wage. 

Trump has said multiple times on the campaign trail that eliminating taxes on tips would be part of his economic policy. 

“This is the first time I’ve said this, and for those who work at hotels and people that get tips, you’re gonna be very happy because when I get to office we are going to not charge taxes on tips, on people making tips,” he said in June.

Culinary Secretary-Treasurer Ted Pappageorge and union members echoed their initial skepticism of Trump’s sincerity.

Leain Vashon, a bell captain at the Paris and the vice president of the Culinary Union, views Trump’s statements as more of a campaign slogan than a policy priority.

“It’s not a solution,” he said. “Right now I’m just thinking it’s a slogan someone can use to get votes in Nevada.”

There has already been traction at the federal level to exempt tipped wages from federal income tax through the No Tax on Tips Act introduced by Republican U.S. Sen. Ted Cruz.

U.S. Sens. Catherine Cortez Masto and Jacky Rosen signed onto the bill in July.  

In a statement in July, Rosen said “getting rid of the federal income tax on tips would deliver immediate financial relief for service and hospitality” workers in Nevada. In that statement Rosen also reiterated the call to raise the federal minimum wage.

Republican Sam Brown, who is running against Rosen for U.S. Senate, quickly endorsed the idea of not taxing tip income after Trump floated the idea.

The Current asked Brown’s campaign about the candidate’s position on employers paying subminimum wages, but the campaign did not provide a response. 

Former North Las Vegas Mayor John Lee, who is running against Horsford in Congressional District 4, didn’t respond to requests for comment. 

Neither the Culinary nor congressional backers can provide an estimate of how much of a financial impact would actually be realized if tips weren’t taxed. 

An analysis by the left-leaning Center for American Progress projects that “exempting tips from income taxes does nothing for tipped workers whose earnings are so low that they are already exempt from income taxes.”

The group points to an estimate from the Yale Budget Lab indicating at least a third of tipped workers don’t make enough to pay any income taxes, and for moderate wage tipped workers who do pay income taxes, any tax relief from not taxing the tipped portion of their income would be small.

Whatever the amount, Pappageorge said eliminating taxes on tips would ultimately aid people in their ability to make ends meet and pay bills. 

Though employers are not allowed to pay subminimum wage to tipped workers in Nevada, a few of the Culinary members at last week’s roundtable said they had worked in states with subminimum wages and would often see paychecks of as little as a couple dollars. 

Lori Scavnicky is currently a cocktail server at the Luxor. Before moving out to Las Vegas several years ago, she lived in Ohio and struggled to get by working two restaurant jobs, earning a subminimum wage at both.

“You would never make a paycheck” large enough to help much with expenses “and it was hard to live on the tips you did make,” she said. 

Horsford said there is nothing stopping future state legislatures from attempting to roll back bans, which is why Congress should step in federally. 

“Some of these employers are trying to keep workers at poverty wages,” he said. “We need to break that. We need to break this idea that people can work for less than a fair minimum wage and for me that’s a liveable wage.” 

Horsford said both efforts to increase the federal minimum wage and reform, if not ban, subminimum wages would be a top priority “when Hakeem Jeffries is the Speaker of the House and Democrats are back in control.”