No tax on tips debate heats up as restaurant chef, server clash over how they're paid
The 2024 election cycle has spurred another cultural uproar about tipping in the restaurant industry, and workers from the front and back-of-house want to make sure their takes on the debate are heard.
"It would be huge. But also, it goes both ways," New York tri-state area executive chef Matt Alexander, commonly known as "Chef Nasty," told Fox News Digital. "I do believe that we should just eliminate tipping entirely. I think that you would gain a superior experience if you were just to pay people a higher wage."
"I don't support that idea because I think that paying taxes is kind of what we do as American citizens," West Palm Beach-area server Olivia Kerwin also told Fox News Digital.
"So I don't think that just because someone makes their wage by being tipped means they shouldn't be taxed on their income, the same as anybody else would be in a different profession," she added.
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Both presidential nominees, Vice President Kamala Harris and former President Donald Trump, have publicly voiced their backing of a tax-free tips plan, which would end taxes on tipped wages.
Trump reportedly first announced the idea in June at a campaign stop in Nevada, while Harris announced during a campaign speech earlier this month – also in Nevada – that she wanted to do the same.
"It would definitely hurt you if you're working so hard for these tips, [then] you're getting taxed on it. But I believe that, for me personally and a lot of the other people in the back-of-house, if we're working our tails off, and we're being fully taxed, I believe they should be, too," Alexander said.
"I think the take home [pay] would be greater, but I think that it would be more of a short-term gain, because most people in the industry don't save their money properly," Kerwin responded.
"Speaking from personal experience… You get in the mindset of, ‘Oh, well, I made $200, $250, $300 tonight. I can go out and spend it on this, and then I'll just pick up a shift and make it back.’ And it becomes kind of like a vicious cycle."
Harris and Trump’s proposals, neither of which contain any details, are likely to be popular among those in the service industry. However, questions linger about whether they constitute good economic policy.
Nonpartisan policy group the Tax Foundation has estimated such a proposal would cost at least $10 billion annually and result in a $100 billion reduction in tax receipts over 10 years.
"I don't think we're going to be the superheroes here, that are going to get us to the next level where we need to go in terms of national debt. But I do feel that the wage needs to be higher," Alexander said.
"And it's becoming higher now in fast food especially, but in the typical, full-service restaurants, I think there needs to be definitely a change," he added. "With the cost of goods coming back down from what we saw there in COVID, I think that now is the opportunity to really turn the tables, so to speak, and get some new, fresh ideas going."
"Thinking about the big picture and thinking long-term," Kerwin countered, "I feel like even if my salary was increased because I wasn't being taxed on my tips, what about in the future?"
"If I'm not paying taxes, I wouldn't be able to collect Social Security? I wouldn't be able to get any kind of residual back for the taxes that I paid out based on my income for the following year, taxes-wise?" she posited.
A LARGE MAJORITY OF CONSUMERS BELIEVE TIPPING CULTURE IS ‘OUT OF CONTROL’
Prior to his current role at Cingari Family Markets, Alexander graduated from the esteemed Johnson & Wales University culinary school to work and survive in the bellies of Michelin star beasts. But he feels the reason why high-caliber restaurants, like those now depicted in modern media hits like "The Bear" or "Burnt," don't offer livable wages is because "it all comes down to profits."
Kerwin transitioned from a full-time to part-time server earlier this year to pursue a new career opportunity. Now, only working one to two nights each week at an upscale steakhouse, she fears full-service restaurants are not able to offer an hourly rate that matches what’s currently earned by wait staff.
"I know that by putting forth the extra effort, and adding those little personal touches or taking extra good care and doing those little special things for people, it's going to increase my likelihood of making more money," she explained.
The best solution, according to the executive chef, who made an appearance on the Food Network, is to follow the fast food industry’s lead and pay every restaurant position a livable wage. He also pointed out misconceptions about pooled tips.
He told Fox News Digital he often employs this analogy: "there's always that person on the group project that got an ‘A,’ that never showed up to the meetings, never handed in an assignment and they're walking away with an ‘A.’"
"There's bussers, servers, there's other employees that need to be tipped out," Alexander added. "So your tip doesn't go 100% to the person that's actually giving you the table service… And a lot of places are weather-retaining or depend on a season… the cards can be stacked against you. There's a lot of variables. It's super variable. And I think that people don't realize that."
Kerwin echoed that there’s "room for improvement" within the restaurant industry’s pay-out structure, but for now, she feels the system works as it is.
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"Tipping is optional. So sometimes, I've been stiffed. We've all been there," Kerwin added. "But I think that by having just a wage that you just knew you were going to get every single time that you went in, [it] is not going to incentivize servers to actually hustle the way that they do."
"This is people's livelihood, and not everyone has the privilege to be able to go to college or to do internships that open other doors… I think, just leave it alone."