HOW MUCH DO YOU TIP AND TO WHOM ?

[GailL1]

I am old school and I tip for good service - 20% or more 

I tip those who do a good job, but there has to be good service and an actual service.  I tip my gardener and those who do landscaping work around my home pretty well since I can see how they work and sometimes in not really good conditions.  

I am aware of how tipping works in many restaurants - meaning that they share with others who are sometimes in the background.  While going to college, my Daughter spent many an hour working in an affluent area at a top notch restaurant and bar.  Some nites she would say why am I getting a degree when I’m making all of this in tips.  She was fortunate because not every server works in such a place.  After graduating with high degrees she learned and the education has really given back to her and she did not continue the restaurant work.  Money in hand does sometimes put stars in their eyes but it is the bigger picture that really count and it did.

But now, we hear of some plans by our politicians, to do away with taxes on tips - would this change the way you do things?  Would it change who you tip?  

And what IF everybody started wanting tips ?  Like your doctor or your dentist?  

The other day, I had some junk hauled away by one of the national names - they gave me a price to remove it, then I had to check a tablet on what tip amount I was giving to them - It wasn’t cheap.  

Do you tip the baggers at the grocery story ?  What about the ones that take your groceries to your car and load them in if needed?  What about the postman (or postwoman)?    They do all provide a service.  But I can see that this might get totally out of hand.

Please stay away from politics - when responding.  But it would be interesting if you do respond on your tipping habits and if something like this would change how you do it and to whom.

This is the article that got me thinking about this 

AXIOS 08/14/2024 - What a "no taxes on tips" policy could mean for U.S. tipping culture

[JohnG862958]

I think tipping is a way to communicate that you value ( or NEED) the service. YES you can tip the postPERSON-just NOTin cash - must be gift card/ present 

[GailL1]

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@JohnG862958 wrote:

YES you can tip the postPERSON-just NOTin cash - must be gift card/ present 

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I did not know that - why?  It isn’t like a bribe.  😎

[WebWiseWoman]

Great topic, Gail! Tax on tips became law in 1982 [Tax Equity and Fiscal Responsibility Act (TEFRA)]. This led to business owners confusing this with Federal Payroll Tax, which they had to match.

Now, however, they are not confused; this act will NOT exclude the Employer from paying federal payroll tax on tips; that is why this will probably not pass. This, as written, is bad legislation; until the Employers are not on the hook for taxes not in their responsibility, this is bad legislation, period.

btw, I was front-line against this tax on tips in 1982 and remain the same.

EDIT: forgot to include I do not order anything I cannot tip at least 20% for, EVER; whether delivery, dining, shopping, ride, never tip less than 20% and actually hope the service is worth higher tip; they are providing service for me and I want to appreciate their time and care.

[GailL1]

@WebWiseWoman 

I ran across a 1984 New York Times Article on the new tip allocation rule - 

NYT - 02/21/1984 - WAITERS AND I.R.S. GIRD TO DO BATTLE OVER TIPS 

The 1982 law was not that it began taxes on tips - the workers were suppose to have been self-reporting to the employer before then - but many thought, and probably correct, that this was being under reported.  Thus the law, which was a new way to allocate the tip amount - although both the employers and the employees thought their tips were then overreported.

Yea, I really don’t see this passing at all - it is pretty crazy if you think about it.  

Wasn’t it a standard to give the employer a bit of a credit from the IRS for having to do all of this figuring of the taxes especially for those who had to do the splitting between different workers some of whom were not in the public eye - like the busboys, the servers as differing from those who were in the forefront.  I just though that I had read about a credit for this type of allocation / tax withholding and reporting be cause it required extra man hours to compute. 

A question:  Do you think these occupations where tipping is not the norm (like the restaurant industry) but the workers are getting them - do you think they report their tip income ?  I gave the example of my yard workers - yes, I tip them in cash.  

Probably the best thing that has come along in reporting of tips is that nowadays most everybody works in a cashless business for the most part thus tips are reported as tips under whatever pay method is used.

But still there is a lot of cash given to many that don’t rely on tips as a majority of their pay - meaning , those who don’t normally get them but do if their services meets expectations or above.

[WebWiseWoman]

I'm not sure what the solution is; I just know the ONLY advantage most found from "TEFRA" was they had tax returns that included tips as income, so they could finally qualify for car or home loans, previously out of their reach.

Without a minimum livable wage, in today's economy, most can't qualify now even with tips included. Somehow this must be corrected.

Thanks again for the topic!

[GailL1]

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@WebWiseWoman wrote:

I'm not sure what the solution is; I just know the ONLY advantage most found from "TEFRA" was they had tax returns that included tips as income, so they could finally qualify for car or home loans, previously out of their reach.

Without a minimum livable wage, in today's economy, most can't qualify now even with tips included. Somehow this must be corrected.

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BEFORE the 1982 Tax Equity and Fiscal Responsibility Act (TEFRA) many people just didn’ report their tip income for taxation or anything else - so yes, they were at a disadvantage on a lot of things, those you mentioned as well as not getting their “earnings” taxed by the payroll tax for their Social Security benefit amount.   

But government did what it always has - that is to say, they didn’t stop to educate the people affected and why this move was good for them - government just stuck the responsibility on the employer.  

Even today, we have self-employed people that don’t report their earned income for tax purposes or benefit purposes (Social Security and Medicare).  I think they call this “working under the table”.  Then some, just don’t know any better - they think what they think even when wrong in principal.

Most likely we need to do away with tips - at least in some industries and then have some way of tracking them better like in a cashless society which we are fast becoming.

Now a “minimum living wage” is a subject that would really be worth discussing.  

[EricC28201]

Interesting Topic @GailL1 .
40 or 50 years ago I worked jobs in the service industry and was classified as a 'Tipped Employee'. Back then declaring tips as taxable income was relatively easy because there was an established minimum based on a percentage of Total Sales. S.O.P. was simply to declare something close to the minimum percentage without consistently declaring the exact minimum. A good week was when I could deposit my paycheck plus some of my tips in the bank to pay the bills and keep the rest of my tips as Pocket Money. A better week was when I could add some leftover Pocket Money to the deposit. A slow week was when I was grateful for the Better Weeks.
On the other side of that coin I have, partly because of those experiences, an antipathy for mandatory gratuity. Granted...getting stiffed despite doing a good job and receiving either contrived or no complaints sucks, in my experience it was the exception not the rule. And many of the folks who grumbled the most about their tips really did provide a below average level of service.
Tipping, or Gratuity, is an expression of Gratitude. Something that these days is so intangible that trying to codify it in any detail would just manufacture the kind of murky swamp of grayness where psychopaths thrive.
The article does make a good point about the unscrupulous element that would try to declare all of their income 'Gratuity' to avoid contributing to the community chest. I think that should also the boundary of any formal code regarding the matter. As long as we have to coexist in a competition based, for-profit economic culture that includes a formalized governmental component relying on taxation to perpetuate its operations, claiming 100% of one's income as 'Tax Free Gratuity' should not be allowed.
On the other hand, the link below maps gratuity in the marketplace. It seems to indicate that this is a matter that has an extremely low probability of causing the collapse of civilization. Expressions of gratitude are so intangible and varied that maybe we would be better off if we migrated to a culture, at least for now, that leaves them codified as little as possible. A standard Minimum Wage that applies across the board. No mandatory expression of gratitude, implied or otherwise and only the most basic established boundaries to discourage the less conscientious elements of our collective nature.
Kinda like when Lieutenant Dan got Forrest Gump invested in that 'fruit company' and told him he didn't have to worry about money no more. And Forrest said, "Well that's good. One less thing,".

K.I.S.S. 😉

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