An unjust tax that should never have been levied!!

[Subduction Zone]

Have you ever worked as a waiter or waitress? The income is raised by adding tips to the income.

Yes, many years ago. And one only needs to claim 8% of sales as tips. If you are pulling in less than 10% as a waiter then you are more than likely doing an extremely poor job. I worked in a restaurant next to a university. College students are not known for being rich and I could still get decent tips from them. Though of course there were always a few jerks, but that was not limited to college students. I found out that the people that promise to tip you will never do so. I don't know who that they think they are fooling. I would still give them good service, but there is nothing scarier for a waiter to here than "Oh, I tip really well" at a table.

ETA: I also know how they "raise your wage". But like it or not tips are income. One has to pay taxes on income and I did go back and look at my source and saw that you would have to pay the employee's share of both social security and medicare tax. That is only roughly seven percent of your tips. And it is a tax that all of us pay. If you were self employed you would be paying at twice that rate. So you should be thankful for small favors.

 

[pearl]

I can only go by the experience our daughter had while working in high-end restaurants. The tips were calculated by the receipts at the going rate. They were also shared with the bartender and the bus boys. Hair salons are also known for frequent tipping.

 

[Subduction Zone]

I can only go by the experience our daughter had while working in high-end restaurants. The tips were calculated by the receipts at the going rate. They were also shared with the bartender and the bus boys. Hair salons are also known for frequent tipping.

Was your daughter making money at that rate? What do you mean by "the going rate" anyway? You do realize that tips are income by now, I hope.

 

[pearl]

Was your daughter making money at that rate? What do you mean by "the going rate" anyway?

I think today it is 15%, then it was probably 5 or 10%. Tips back then were in cash, so that rate was assumed even if not actual and that's what the taxes were paid on.

 

[BSM1]

How much was a gallon of gas? Even a quarter? Probably less than $.20.

Or did you just put your dinosaur out to graze?
Tom

In the summer of '66 gas went to 29 cents per gallon and the minimum wage rose from 90 cents an hour to a whole dollar. I was working my first real job as a carhop in a local drive-in restaurant and the extra tip money gave me my weekly poker stake.

 

[Revoltingest]

hey me too! for one summer... and that's true - no tips in the kitchen, but not a bad training? - it's probably what drove me to sea-farin!

I still miss having to eat the 'mistakes' for lunch though

I learned that the food service industry was not for me.
And how to twirl pizza dough up in the air.
(Never needed that skill as an engineer though.)

 

[Revoltingest]

How much was a gallon of gas? Even a quarter? Probably less than $.20.

Or did you just put your dinosaur out to graze?
Tom

I remember gas being well below $.20 during the gas wars.
Our dinosaurs became pets when they could no longer harvest rocks at the quarry.

Here's a song we used to sing back in the day....

 

[9-10ths_Penguin]

ETA: I also know how they "raise your wage". But like it or not tips are income. One has to pay taxes on income and I did go back and look at my source and saw that you would have to pay the employee's share of both social security and medicare tax. That is only roughly seven percent of your tips. And it is a tax that all of us pay. If you were self employed you would be paying at twice that rate. So you should be thankful for small favors.

Something occurs to me: I've been hearing from American friends that tips are now considered (or will soon be considered?) to flow from the customer to the employer first, not directly to the server... so this means when the tips get paid out, it's from the employer to the server. Would this mean that the employer is now required to pay the employer portion for stuff like Social Security?

 

[Revoltingest]

Something occurs to me: I've been hearing from American friends that tips are now considered (or will soon be considered?) to flow from the customer to the employer first, not directly to the server... so this means when the tips get paid out, it's from the employer to the server. Would this mean that the employer is now required to pay the employer portion for stuff like Social Security?

According to....
Taxes on Tip Income - Lawyers.com
....employers must already do payroll withholding on reported tips.

Tips are considered to be employee wages, thus employers are required to withhold and pay to the IRS payroll taxes on the tips employees report to them each month. This includes income tax, Social Security tax, and Medicare tax. Because, unlike regular wages, tips go directly into the employees’ pockets, employers typically do this withholding by deducting the taxes due for tips from their employees’ regular wages.

 

[Subduction Zone]

I think today it is 15%, then it was probably 5 or 10%. Tips back then were in cash, so that rate was assumed even if not actual and that's what the taxes were paid on.

You misunderstood me. At any rate your complain may be with your daughter's restaurant, if she is a poor server. As I showed you the rate is 8% not fifteen that the IRS demands.

 

[Subduction Zone]

Something occurs to me: I've been hearing from American friends that tips are now considered (or will soon be considered?) to flow from the customer to the employer first, not directly to the server... so this means when the tips get paid out, it's from the employer to the server. Would this mean that the employer is now required to pay the employer portion for stuff like Social Security?

I have no clue. The IRS link that I supplied did mention that the waiter had to pay his share of that tax. I don't know if the employer had to pay his share. But it is unlike the IRS to ignore a source of funds.

 

[Politesse]

It's not decent to treat it like an optional gift sometimes, and a part of someone's income at other times, just to screw the worker.

If tips are a gift, they shouldn't be taxed like regular income. There are rules about how to tax gifts in the US; the tax only applies to gifts rather larger than most tips and the responsibility is on the donor, not the donee. Except for this one exception, which seems calculated to screw over the vulnerable for not much gain in overall tax revenue.

If they are part of regular income, ie a direct payment for services rendered, then it should be taxed accordingly, but an amount should be specified before the sale and it should be illegal to refuse to tip a waiter once the service has been rendered.

 

[Subduction Zone]

If tips are a gift, they shouldn't be taxed like regular income. There are rules about how to tax gifts in the US; the tax only applies to gifts rather larger than most tips and the responsibility is on the donor, not the donee.

If they are part of regular income, ie a direct payment for services rendered, then it should be taxed accordingly, but an amount should be specified before the sale and it should be illegal not to tip a waiter.

Except in some states it is legal for restaurants to pay servers less than minimum wage since they will make up for it in tips. That clearly puts tips into the wage category. Perhaps you should look at the qualifications of a wage that the IRS uses. I have a feeling that your argument fails when you do that.

 

[Politesse]

Except in some states it is legal for restaurants to pay servers less than minimum wage since they will make up for it in tips. That clearly puts tips into the wage category. Perhaps you should look at the qualifications of a wage that the IRS uses. I have a feeling that your argument fails when you do that.

As I said, I think it would be okay to consider it wages, as long as the customers are required to pay them and fairly informed of the amount in advance, rather than it suddenly being treated as an optional gift right when it comes time to actually pay the worker.

And this isn't about what's legal. The law currently on the books is entirely legal. It's a law. Being legal doesn't make it right. We have a right to push for alterations of unjust laws.

 

[Kapalika]

The one time I worked at a place with tips I made more than I would of otherwise at minimum wage, and I got my tips daily until my check came. Why tips are bad for the employee I have no idea. You have to make at least minimum wage anyway and you can potentially make a lot more. It's at least a lot better than working a job that you're always making minimum wage. And nah they ain't slaves. They are getting paid at least $7.25 an hour come on people get real. (though its gonna be more again, after tips)

No server never gets tips so we all can know they make more than 7.25 on average. If we got rid of tips lets be real owners would just pay them minimum. Actually costs would probably go up too since their overhead for paying wages would as well. Our tipping subsidize their wages and restaurants are already cut throat businesses. Getting rid of tipping would only work if we actually made minimum wage a living wage as well. Then people would have more to spend eating out (preventing increases in cost) and the workers there would get paid better more consistently.

 

[9-10ths_Penguin]

Why tips are bad for the employee I have no idea.

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.

 

[Subduction Zone]

As I said, I think it would be okay to consider it wages, as long as the customers are required to pay them and fairly informed of the amount in advance, rather than it suddenly being treated as an optional gift right when it comes time to actually pay the worker.

And this isn't about what's legal. The law currently on the books is entirely legal. It's a law. Being legal doesn't make it right. We have a right to push for alterations of unjust laws.

You can't force a tip, but one restaurant in the Seattle area after the city raised their minimum wage to $15.00 per hour changed to a commission system The waiters will still get far over the Seattle minimum wage, but that is a legal system. Paying wait staff $15.00 an hour and them getting tipped made little sense. Customers are made aware that the wait staff is earning a full salary and that tipping is no longer needed. If a waiter does do an exceptional job the patrons can still tip, but no one is looked down upon if they don't.

 

[Subduction Zone]

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.

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.

 

[pearl]

At any rate your complain may be with your daughter's restaurant, if she is a poor server.

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

 

[Akivah]

An unjust tax that should never have been levied!!

Plenty of people say this about the Income tax as a whole.