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30 sats \ 2 replies \ @note_bene 6h \ on: Mini Pleb Economist: No Tax on Tips? econ
Are you guys hanging out with the same bartenders and waitresses as me? These people are not exactly George Washington level truth tellers, especially when it comes to paying out money at tax time.
Grok tells me:
So basically it's already tax free in practice, and the amount of cost and grief the gov't needs to go through to assess and challenge these small fry earnings is extremely high. There's this plausible deniability due to pooling tips from the waiters to cooks and dishwashers "tipping out".
I'm on team "nothing ever happens" w.r.t. this bill; meaning service economy continues unchanged, ceteris paribus of course.
I don't think you're looking at the big picture, which is that the government is essentially carving out a legally tax-free form of transaction. My prediction is that workers and businesses are going to squeeze as much of their economic activity into that niche of eligibility as they can.
I'm not sure how enforcement for tax on tips works, but these days most tips are paid electronically, which is probably harder to evade than cash tips which was more common in the 90s.
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You might be right on the big picture...I'm not there
Looking at the small picture, I'm assuming there will something like box 65b where you'll declare your total income from tips. Basically incentivizing people to fully to even over report.
Thinking more about this, I think a lot of individuals will attempt to roll "grey economy" stuff into box 65b. Because the IRS has always loves to go after people declaring $8k yearly earnings who bought a new BMW.
In essence the gov't is buying a valuable economic survey with by giving "qualified immunity" on a debt they've rarely ever been able to collect well anyways.
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