An unjust tax that should never have been levied!!

[Subduction Zone]

Her tips were excellent for the most part. What I tried to explain is that for every check the government assumes a standard tip.

Then she is underpaying taxes. That makes your claim even weaker.

There is nothing "unjust" about that law. Your daughter is merely paying taxes on the money that she earns as everyone else does.

 

[BSM1]

Just wait a second. Now it looks like you are trying to take all of the fun out of going to Hooters:

That sir is going too far.

Wait a minute...are you saying Hooter's has food, too?

 

[9-10ths_Penguin]

Just wait a second. Now it looks like you are trying to take all of the fun out of going to Hooters:

That sir is going too far.

I'm sure that they would keep on flirting with you. The waitresses there really are into you... not like all the other guys.

 

[Subduction Zone]

I'm sure that they would keep on flirting with you. The waitresses there really are into you... not like all the other guys.

Though I hear their cuisine is top notch the nearest Hooter's to me is over 60 miles away. The girls will just have to go without my business until they open a nearer franchise. I am such a heartbreaker.

 

[BSM1]

I'm sure that they would keep on flirting with you. The waitresses there really are into you... not like all the other guys.

Woo-Hoo!

 

[columbus]

he 15% rate claimed is BS. A business only needs to make sure that their waiters report 8% of gross sales as tips:

Ok, I was wrong. It's only 12%.
My partner manages a restaurant here in southern Indiana. Here's what he told me this afternoon, because I asked for specifics.

At the restaurant he works for:
He doesn't remember the legal minimum wage because it doesn't matter. You can't get a functioning employee for less than $9/hr, so that's the starting wage. We think legal minimum wage is $7.50 or $7.85.

This is an establishment that doesn't care about drug screening, literacy, or citizenship. If you don't have a felony on your USA record you're good.

But, the minimum wage for wait staff is $2.13/hr. That's what they pay anybody who gets tips. Doesn't matter how good or how long you've been there. $2.13/ hr. They have trouble filling third shift, but overall not much. Promise good help better shifts, and give it to them when it works for everyone. The best ones stay and make a ton of money during busy times. But there is a lot of turnover. Really good ones go to more lucrative restaurants, bad ones quit.

A server clocking out must declare a minimum of 12% of total tickets or the machine won't give them anything of their credit card Tips. And the restaurant withholds taxes on everything, including the 2.13. The employees can deal with IRS however they want. He doesn't know how anybody does it, because he doesn't and it isn't his job. And when the 2.13 isn't enough to cover withholding the employee must make up the difference before the next shift or s/he can't clock in. That doesn't really happen often, given that the wait staff don't make that much and usually don't have large withholding amounts.
Tom

 

[Subduction Zone]

Ok, I was wrong. It's only 12%.
My partner manages a restaurant here in southern Indiana. Here's what he told me this afternoon, because I asked for specifics.

At the restaurant he works for:
He doesn't remember the legal minimum wage because it doesn't matter. You can't get a functioning employee for less than $9/hr, so that's the starting wage. We think legal minimum wage is $7.50 or $7.85.

This is an establishment that doesn't care about drug screening, literacy, or citizenship. If you don't have a felony on your USA record you're good.

But, the minimum wage for wait staff is $2.13/hr. That's what they pay anybody who gets tips. Doesn't matter how good or how long you've been there. $2.13/ hr. They have trouble filling third shift, but overall not much. Promise good help better shifts, and give it to them when it works for everyone. The best ones stay and make a ton of money during busy times. But there is a lot of turnover. Really good ones go to more lucrative restaurants, bad ones quit.

A server clocking out must declare a minimum of 12% of total tickets or the machine won't give them anything of their credit card Tips. And the restaurant withholds taxes on everything, including the 2.13. The employees can deal with IRS however they want. He doesn't know how anybody does it, because he doesn't and it isn't his job. And when the 2.13 isn't enough to cover withholding the employee must make up the difference before the next shift or s/he can't clock in. That doesn't really happen often, given that the wait staff don't make that much and usually don't have large withholding amounts.
Tom

A good waiter will still make more than even the beginning wage at any half decent restaurant. I am surprised that Indian still allows such low pay for wait staff. Many years ago when I was working in Minnesota they got rid of the reduced hourly wage rate for tipped employees. The employer might be demanding a claim of 12% because that is the average with both credit cards and cash. They probably do not want to run afoul of the IRS. If your daughter thinks that this is unfair she should keep a daily record of tips. If one does that the IRS will usually honor those claims.

 

[Kapalika]

Two reasons come to mind right away:

- it makes your pay dependent on factors outside your control (how busy the restaurant is, how the kitchen performs, etc.). It shifts risk in a generally unfair way.

- it creates a situation where a server's pay can be tied to stuff that it really shouldn't. For instance, it would be illegal in most places for a restaurant owner to reduce the pay of servers who don't flirt with the customers, but it isn't illegal for the owner to set up a system where this is the outcome.

None of that negates or addresses the other points I brought up (those reasons being the reason I made that statement). The fact is abolishing tips will unequivocally hurt servers' earnings unless minimum wage is also raised.

The points you raised seem to be more of ethical ones rather than wage ones, but I think it's more unethical to hurt them in their wallet than put them in the situations you described. That said, I've never seen a server flirt with anyone, just be friendly. Sometimes people take that as flirting but that doesn't mean they were.

 

[james dixon]

People that earn a low salary are not going to be paying income tax on tips. Have you ever filed income tax?

The tax is taken out of the tip the moment the service is paid by the customer. A tip is a gift. And this gift is taxed. Next our government will require you to report any Christmas gifts you received in order that this gift is taxed as well.

taxing tips is unjust and should be stopped,

 

[Revoltingest]

The tax is taken out of the tip the moment the service is paid by the customer. A tip is a gift. And this gift is taxed. Next our government will require you to report any Christmas gifts you received in order that this gift is taxed as well.

taxing tips is unjust and should be stopped,

Tips are not gifts. This is because the compensation system here is predicated
upon waiters receiving tips as a fee for service, & their wages are adjusted downward
to reflect this. Tips can account for many tens of thousands of dollars/year of income.
But note that if you do gift someone over $14,000 in 2017, the donor must pay a gift tax.
Useful info....
Frequently Asked Questions on Gift Taxes | Internal Revenue Service

If you really want to give a gift to a waiter, it's best to do so outside of the workplace.

 

[Subduction Zone]

The tax is taken out of the tip the moment the service is paid by the customer. A tip is a gift. And this gift is taxed. Next our government will require you to report any Christmas gifts you received in order that this gift is taxed as well.

taxing tips is unjust and should be stopped,

Nope, not a gift, read Revoltingest's post.

 

[BSM1]

The tax is taken out of the tip the moment the service is paid by the customer. A tip is a gift. And this gift is taxed. Next our government will require you to report any Christmas gifts you received in order that this gift is taxed as well.

taxing tips is unjust and should be stopped,

Actually there is a tax on gifts if the gifts can be considered "constructive receipt". This is why you have to pay taxes on game show winnings.

 

[james dixon]

Tips are not gifts. This is because the compensation system here is predicated
upon waiters receiving tips as a fee for service, & their wages are adjusted downward.

Just because you can find some excuse to justify the scam employers use to steal an employees rightful money does not make it right. That is the point of this thread,
taxing tips is unlawful and should be eliminated
period

 

[Revoltingest]

Just because you can find some excuse to justify the scam employers use to steal an employees rightful money does not make if right. That is the point of this thread,
taxing tips is unlawful and should be eliminated
period

I haven't addressed what's moral or immoral.
I've only described our system as it stands.
But employers aren't stealing anything.
As agents (unwilling) of Uncle Sam, employers
must withhold & pay employee payroll taxes.

I got out of the having-employees situation.
I've hired only independent contractors for
many years now. They handle their own taxes.

 

[Subduction Zone]

Just because you can find some excuse to justify the scam employers use to steal an employees rightful money does not make it right. That is the point of this thread,
taxing tips is unlawful and should be eliminated
period

You need more than just your own opinion to justify your claim. Why is it unfair? It really is not a gift. Ask your daughter how she feels when someone stiffs her. Perhaps you should lobby for a commission basis for tips. Then a wait person would be paid on their sales ability, and I know from experience that a good waiter can and will raise sales. I had to have the talk given to me early in my time as a waiter on how important beverage sales were to the restaurant. I was never a soft drink fan and I tended to project that onto my customers.

By the way, employers are not benefited by collecting funds for the IRS so they could hardly be accused of "stealing". When I had employees I (there were no tips involved) I had to withhold money from their pay for the IRS. Plus I had to match their Social Security and Medicare contributions. In other words if I was paying someone $10.00 an hour it actually cost me about $10.80 and hour. I would have made more money if I did not have to pay that tax for employees. And that was just the beginning of extra costs of hiring employees.

Also you are clearly wrong. It is not unlawful. The law is quite clear on this matter. You may think that it is immoral, but you have not even made a case for that.

 

[9-10ths_Penguin]

taxing tips is unjust and should be stopped,

No, the thing that's unjust is a system where people are forces to rely on tips to get by. Employers should have the obligation to pay a living wage.

 

[9-10ths_Penguin]

You need more than just your own opinion to justify your claim. Why is it unfair? It really is not a gift. Ask your daughter how she feels when someone stiffs her. Perhaps you should lobby for a commission basis for tips. Then a wait person would be paid on their sales ability, and I know from experience that a good waiter can and will raise sales. I had to have the talk given to me early in my time as a waiter on how important beverage sales were to the restaurant. I was never a soft drink fan and I tended to project that onto my customers.

"A commission basis for tips" would just be "a commission," no?

Here's the thing with tips or commission: if you're going to encourage performance with incentives and disincentives like variable pay, it has to be with regard to things that the employee has the authority and responsibility to do. For instance, car salespeople work on commission because they're expected to - and given the authority to - beat the bushes to find leads and convert them into sales.

If a server - or whoever - doesn't have the ability or authority to influence those factors that are determining how much they get paid, then what you have isn't encouragement of performance; you have the business owners just transferring some of their risk onto their subordinates who aren't in a position to refuse, which is a bit of a jerk move.

 

[Subduction Zone]

"A commission basis for tips" would just be "a commission," no?

Yes.

Here's the thing with tips or commission: if you're going to encourage performance with incentives and disincentives like variable pay, it has to be with regard to things that the employee has the authority and responsibility to do. For instance, car salespeople work on commission because they're expected to - and given the authority to - beat the bushes to find leads and convert them into sales.

I have never discussed what car salesmen do. I know that stores with sales people that earn commissions are expected to not only close the sale, but to try to get people to purchase more. The same applies to restaurants. With drinks, appetizers, deserts, etc. a patron can more than double his bill.

If a server - or whoever - doesn't have the ability or authority to influence those factors that are determining how much they get paid, then what you have isn't encouragement of performance; you have the business owners just transferring some of their risk onto their subordinates who aren't in a position to refuse, which is a bit of a jerk move.

I gave at least one example in my prior post. Now I have fleshed it out some more. Also some servers can handle more than others. Way back in my heydays of being a waiter the restaurant that I worked at had an early computerized ordering system. One would punch in the number for a menu item, add any special instructions with appropriate keys and send it back to the kitchen printer. One would need not talk to the cooks at all if one was proficient. We would have a group occasionally come reserve a spot and have about 30 people come in at once. It would usually take to servers and a manager to handle them. I could handle them with just the aid of a manager. We had on the order of two hundred different numbered items and I simply remembered the numbers. My handwriting was not the best but I could write the numbers clearly and it was much faster than two people scanning the list and entering the numbers. Since I could handle it better than two servers they tried to use me for them whenever they could. I save the restaurant money and made more myself.

A good server can sell more to a table, and make the customers happier with their experience than a poor one. With a commission basis that server will earn more money. The restaurant will make more money. It is not a "jerk move".

Also experienced and proficient servers will get the better shifts. Again, making more money for both themselves and the restaurant. It can be done right.

 

[Revoltingest]

No, the thing that's unjust is a system where people are forces to rely on tips to get by. Employers should have the obligation to pay a living wage.

Some employers buck the system, & post "No Tipping", while paying a higher wage.
But where it's a tip based wage, it's not at all unjust. Were it so, you wouldn't find
so many flocking to waiting tables, & making a living from it.

 

[james dixon]

There are those who want to maintain the statue quo & there are those who recognize an unfair act. This divide is self-evident.

When you “tip” a waiter you are giving a gift that should not be taxed; taking away from him/her that small amount that helps them make it through the day.

Tips should not even be in the IRS ledger; period

End Taxing Tips NOW!!!!​