I can't think of anyone I know who supports taxing tips since most service workers have such low wages.
I don't think anyone "supports taxing tips" for low income workers. But, I think the issue is a little more complex than that.
First of all, many "low income" workers probably already paid little or no taxes as it is. If you are working tables for minimum wage in some greasy spoon diner, you may depend on tips to survive, but your income may already be below the threshold where you play ANY tax. So eliminating tax on tips brings your income tax from zero down to zero. (Meanwhile, the waiter in the upscale steakhouse serving prime rib to wall street executives may have a high enough income where eliminating tax on tips means something, but he's probably not the type when you think of the "struggling service worker" that you need to help.)
Secondly, I think there is a legitimate concern that there will be employers who will use the "no tax on tips" policy as an excuse to suppress wages. "Why do I need to increase your salary? You have all this tax-free income now!"
Thirdly, there are a lot of people who earn low wages, but do not receive tips. They may be struggling just as much as the service worker, but are getting no benefit from the policy. (Heck, they may end up worse off, as the government deficit goes up they will lose government services.)
A better option would have been to decrease tax rates for the lower tax brackets, and/or increase the threshold where a person pays no tax. That way, it benefits both the low-wage waiter/waitress, and the low-wage retail worker equally. (And in addition, those that receive tips but have relatively high incomes won't get as much of a "winfall".)
www.theguardian.com
