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A few months ago I commented on how vote buying is becoming commonplace of late.
Kamala's latest salvos have taken this to ridiculous new heights. It's hard to keep track but so far I see:
She even copied Trump's rather feeble attempt to buy votes with his "no taxes on tips" idea. (Not direct vote buying since this only offers relief from taxes, not direct payments).
Needless to say, subsidizing demand and price controls have a disastrous track record wherever they've been tried. Her policies, if implemented, would create huge disruptions in the market and likely to lead to high inflation as well as a serious and deep recession. If you are a net contributor to the tax system, things will become much worse for you as your taxes go up massively to pay for the freeloaders.
In other news, the price of gold hit an all-time high today.
On an semi-anecdotal note, this might tank support for Harris amongst Latinos, which was already weakening.
I’m hearing the word “Venezuela” a lot bandied about in TikTok & Instagram when taking about the rule of the Democratic Party, and none of it is flattering. Rather, it is dripping with absolute dread and seething hatred.
Unlike the college freshman types (both literally and in spirit), most 1st gen Latinos have extensive direct experience with left populism and this type of shameless vote buying and looting of the treasury. And contrary to what some segment of the anti-immigrant crowd likes to say, those amongst the immigrants that go through the bother and expense of naturalization very much do not want their adopted homeland to resemble the country they escaped.
I used to get a lot of pushback from my Latino part of my social circle for my open support of Trump, but not anymore. I’ve witnessed almost all of the blue-leaning Latinos slowly flip in the last eight years to at least tacit support for Trump. And I’m not in any way a bubble; my own family is a mixture of Amerikaner with some ADOS sprinkled through it. And my Latino family connections are very geographically widespread. I was even shocked to hear one of my friends, a very feminist coded Latina from New York, say she’s voting for Trump. Four years ago my views upset her deeply, but the reality of our situation has sunk in.
Although I personally am very in favor of heavily restricting immigration, it clearly comes with many benefits; one of which is a rich and varied experience with the many possible failure states in which a society can find itself. Much how people with direct experience of the Soviet Union are overrepresented in the vocal part of the anti-woke movement, so too it seems that 1st gen Latinos are populating the opposition to this profligate left economic populism.
What does Amerikaner mean?
The genetic swirl of Scots / Irish / English / Germanic / Nordic blood that eventually settled as the “generic white” main European ethnicity of the USA. Often the people who list “American” on the census as their ethnicity. The main population of Appalachia & The Midwest.
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The equivalent of Afrikaner, for the appropriate continent.
In practice, it means Native American, or ethnically American.
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I mean, to be fair, no taxes on tips acknowledges a de facto reality: who reports their tips in their tax returns? Enforcement would be impossible. As a handout to Nevada, it makes sense politically.
Harris's proposed policies make Trump look like the king of austerity. Considering how spendthrift he is, that's an accomplishment.
Most tips these days are on credit card payments, which the employer reports anyways.
Now certain bartenders can and do get away with underreporting income, but mostly in bars where paying big cash payments is A Thing as a status symbol in the scene. Almost all of these people use cash payments to steal from their employer anyways(through various scams enabled by the structures of bar management), so bar owner economics is to disincentivize cash payments. Waitstaff usually isn't that sophisticated and just reports that cash payers tip them 0%, then pocket the money- but you won't catch them because they're smart enough not to deposit the cash. OTOH restaurant managers tend to tell me that a higher percentage of cashiers(waiters usually aren't allowed to cash out their own checks) have been pilfering from the till recently; I suspect that this is related to low-end labor shortages making it harder to hire honest people for those kinds of jobs, so some of the same factors apply- it's impossible to steal credit card payments from your employer without much more sophistication than these people have.
TDLR there's a large quantity of tipping done via credit card and no way for service workers to prevent it being reported. The incentives of owner-men in the hospitality industry are to increase this percentage due to employee theft.
Experiment: When a plumber, electrician, or handyman has finished his job and expects payment, ask if paying in cash is OK. You will see an expression of pure joy cross his face as he answers "yes".
Ask them for a cash discount. If they don't offer one up front, which they often do. I suspect the smarter ones are offering an X% cash discount and recording an X+N% cash discount, and the dumber ones are just not recording the payment at all.
I don't know anything about taxes, why are they the dumber ones?
I imagine it looks more suspicious in an audit to have records (phone, email, etc.) that you performed a job but never got paid for it vs. getting paid (but only recording a fraction of what you were actually paid).
Wait a second. Audits mean the government gets to sift through all your communications???
I suppose they only have the right to see email accounts and phone records of your business, not you personally?
As best I know an audit has nothing to do with sifting through your phone and email.
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In tax audits, more often than not they take your business records at face value. They usually are just checking that you calculated tax correctly and have support for your figures. You're in deep shit and probably messed something up badly if they have suspicions about the veracity of your purchase orders and statements of work.
In financial audits...yeah you shouldn't have records of work that you've done with no recorded revenue to match. Your revenue would fail something called the completeness assertion.
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This is a thinly veiled ad for some service that tracks your location for tax residency purposes, but it looks like they can subpeona all sorts of things:
https://blog.monaeo.com/when-the-tax-auditor-subpoenas-your-cell-phone-records
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It's too obvious. If an auditor comes in there will be obvious tells if a fair number of jobs just aren't recorded, like too many supply purchases. Presumably a good enough financial wizard could hide most of this as well, but it will be difficult. On the other hand, figuring out that the amount of cash discount is usually overstated would be much harder to find.
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Although I think it's best to leave this one until the end. When the work is done, fix the price as if there are no discounts. Only once the price is firm do you then bring up discounts.
Otherwise you get the situation where they say "Oh, that's WITH the cash discount" when you go to pay.
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Taxing tips is basically a huge part of IRS enforcement. It is why you always see stats that most audits are on low-mid income people. The IRS knows they dont report so they audit them and check bank statements, and almost always find the person was committing tax fraud by underreporting tips.
In my country tips are much smaller and they're left as cash. Would there be a way to audit those? Are US tips all credit card based or given as part of waiter's salary?
Yes. Cash tips get audited quite frequently. Along with the restaurants themselves.
By what mechanism?
IRS sees you work in a service coded sector. They check your tip box. If its empty they get super suspicious. If its filled out their database compares your number to everyone else in your area and flags those that appear low. Those get assigned a case agent who sends you a threatening letter asking for proof of your reported number matches. You have none cus you're a lying liar who lied and got caught. Now they are looking at your bank statements for 3 years and eventually you enter some payment plan to pay back the last 3 years of tip fraud you committed.
But in reality I have none because no one has any proof about cash tips, right?
To what end?
So basically they just assume that I made the average tip amount in my area and calculate the fraud based on this?
It seems like the difference between my reported amount and the average must be very high for this method to be of any significance. If I work at an unpopular bar my tips might be 3x less than the average without any tip fraud whatsoever.
There is cash deposited in your bank account. Wheres that from buddy? The other bartender at your bar reported $20k in cash tips and you reported $0.
Or maybe you are unbanked, but also somehow pay $1000 in rent and $500 in car payments every month while reporting $500 in income. Sus sus.
To see all the cash you deposited.
Thats where they start. Then they dig.
Of course. But because you are stupid and a bartender at a shitty bar, your reported a ludicrous amount that no one could possibly believe because you think you are smarter than the system.
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Standard US tips are 20% of the bill. Restaurant owners strongly encourage credit card payments to 1) discourage employee theft and 2) prove their employees are making enough in tips to comply with certain regulations, both compensation and contract based. Tips left by credit card are paid to the waiter on a paycheck with the taxes already taken out.
That being said, waiters love it when they're tipped in cash and usually don't report it.
A cursory Google search suggests that 15 to 20 percent is the standard range.
What about the big class-action lawsuit regarding credit-card fees? And the other lawsuit regarding credit-card policies that forbade businesses from "steering" customers away from credit cards and toward cash?
That's the commonly held definition by most people, but there has been a noticeable push towards making 20% the new standard. 20% is usually the default suggested amount on POS systems when I use them, and in some cases it's the lowest option displayed aside from "no tip". This is probably favored by both tipped staff and management, because it leads to larger tips and it reduces pressure for management to raise wages.
This is dumb for all kinds of reasons, chiefly that percentage-based tips are inherently indexed to inflation. And "muh inflation" is the most commonly employed defense of this movement by advocates.
I remember when a flat 15% was standard and 20% was reserved for exceptional service. It wasn't even that long ago. Bah humbug.
Believe it or not 10% used to be standard. And of course you are correct that tips are automatically adjusted for inflation (like TIPS, funnily enough) so there is no legitimate reason for the percentage to increase over time.
My family has severely curtailed restaurant outings for many reasons but personally that is one of mine.
Yeah I'm feeling gaslit by the way that we all turned to saying 15% was standard. My father taught me it was 10% and any more was for excellent service.
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Of course if management raised wages they'd have to raise prices accordingly, so it's a wash from the consumer perspective.
The real interesting part is the recent shit storm in CA about restaurant fees. Basically the legislature passed a law that businesses have to bake all fees into their listed prices. Restaurants shat themselves about this and an amendment to exempt them was fast tracked through the legislature like shit through a goose. However, I could never find a convincing argument for why they should care about this, unless they think that people are so stupid that they'll keep paying a 10% service fee but if they see the prices on the menu increase by 10% then they'll... Stay home? Restaurant owners are clearly insanely focused on sticker prices for some reason that they won't come out and say. Even their op eds never make any real argument, just gesturing at how hard it is to run a restaurant.
Over time, yes. Or buy lower-ticket items.
People are stupid. They will do all sorts of stupid, irrational things. Restaurants want to charge people extra service fees on top of the sticker price for the same reason almost all prices end in .99: cognitive biases.
The whole world is a series of small nudges that, in aggregate, add up to insane wealth.
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I doubt that much would change if they made tips tax exempt. Tax fraud in those lines business is rampant anyway and not dependant on tips. IRS enforcement would still focus on those businesses and find about as much fraud, just using marginally different methods.
Making tips tax exempt just seems like a handout to some demographic (Nevada?), and not any kind of real attempt at improving either the IRS or general tax compliance.
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Low-mid income people do get audited more than anyone but the very high income, but it's not about tips, it's about the earned income tax credit. They might find a lot of unreported tips once they do the audit, though.
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The structure of the tip credit is designed to strongly encourage employers to force tipped-as-in-lower-minimum-wage workers to mark down at least (untipped) minimum wage in tips -- otherwise, the employer has to cover the gap out of their pocket -- and there are some other tax (and SSI) benefits to accurately reporting the typical tipped income.
I won't pretend that this means everybody complies even remotely accurately, and if you're on paper as a normal-minimum wage employee most of those incentives fall away, but it's very far from the free for all most expect
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Cash tips are generally not taxed, it's literally one of the reasons why I tip servers cash when I think the did a good job. Automated tips are taxed though, and they should because waiters can make 6 figures at a good restaurant. There's a reason why pretty much every wait staff prefers tipping over regular wages.
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