Did I hear right? Trump wants to drop income taxes on tips?

@ninalanyon A gift isn't income. Since it's optional it's not an exchange. When I send $$ to financially struggling friends or family that money isn't income for the person receiving it. It's money that I pay taxes for earning it, and scattering it to others doesn't turn it into earned income. As long as I have the option to give or not give it's not "earned" by the person receiving it. Even if a parent givs their kid $10 for every "A" on their report card, it's not technically earned income and the kid doses't have to file and pay income taxes on that money.

@Heartlander That's at odds with the common idea that one tips more for better service.

@ninalanyon They don't have to.

When I get paid by an employer, that employer subtracts my wages from their income and pays income taxes on what's left, meaning that they don't pay income taxes on what they pay me. But I do.

If I then use some of the after-tax income and use it to pay a tip, then to be fair, I should be like my employer, if you think that the person I'm tipping is earning it from me, I should then be allowed to deduct it from my income since the person I'm tipping earned it from me (note that the tip is usually paid directly to the person). BUT I'm not allowed to deduct it, which means that both me and the person being tipped has to pay income taxes on that $2. One person being taxed on that $2 should be enough. The easiest way to be fair is to just let it go tax free to the person being tipped.

@Heartlander employers will say tips are income.
So will tax people.
Good news for customer not so for employee

@Heartlander But it is you has essentially decided that the tip is a "gift". If this is accepted in law, what is there to stop me from declaring that the money I give to the window cleaner, gardener, or any other person who performs a service for me without a formal employment contract, is also a "gift" rather than income.

@SunshineGirl I doubt that a window cleaner or Gardner would work for free. Waiters waitresses don't work for free, they get paid by their employer. That it's at a lower rate for some is a different mattered and unfair.

In general, taxable earned income for one person becomes untaxable for the person who pays it in wages. Subjecting tips to income tax breaks that rule because the person who pays the tip can't deduct it. Imagine the waiter who gets the tip also goes to eat at a restaurant and leaves a tip? Repeat that cycle a few times and taxes would exceed the amount of the tip. Taxes would exceed the value of the tip.
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:) If I can add on, I don't know what window cleaners get paid, but I do know what gardeners, landscapers and housecleaners earn. The lady that did a few flower bed revitalizations sent a notice that her new rate, because of inflation, was $100 per hour. The tree trimmer spent 3 hours trimming back a couple of trees and charged $800. Accounting for his likely overhead expenses, and I would estimate that he was earning about $150 to $175 an hour. The house cleaners don't do as well, about $50 to $60 an hour based on what we pay them for the number of hours they are here. I didn't tip the gardener or tree trimmer, which maybe explains why the don't occasionally call to see if I have additional projects :)

I do however give occasional bonuses to the house cleaners, for Christmas and whenever I believe they extended above and beyond. Maybe it's partly why we are still their customer after 5 years.