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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.
Bigger ticket items are actually less profitable for restaurants on average, because so much of it gets eaten up in food costs. I suspect the bigger concern for restauranteurs is that customers will stop ordering $2.50 cokes(easily the highest markup thing on the menu) to go with their $30 steaks if the price of the former increases by too much.
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I can believe that they think this, but not all restaurants have fees, so it's clearly possible to run a business without it. They also never clearly say this (but I guess that might be bad for business).
People are always going to spin the most positive version of their proposed policies in public discourse. Particularly here, since restaurant fees are a specific industry and not a more general question (like personal tax rates), there's less room for people to say the quiet part out loud. So all you get is the "this will hurt our business!" and not the "this will make people rationally decide our business is charging too much money and go elsewhere!"
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
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