Now that servers are not going to be taxed on their tips, do we still have to tip them as much?

I’m sure that servers and hair stylists and cab drivers and everybody else who lives on tips would argue that we do, and perhaps should tip them even more.

But why? Why do they rate a sudden annual windfall?

Don’t get me wrong. I’m all in favor of people who are generally underpaid being paid the amount of money they actually deserve. Like newspaper reporters, for instance. And also servers and hair stylists and cab drivers and bartenders and everyone else who depends on tips.

Note to readers who are going to comment online and say that I hate people who work for tips: Please read that last paragraph again. Thank you.

I think they should make more money. And I think they should pay taxes on the money they make.

It’s an income tax. You pay tax on the income you make. Tips, and also overtime, are income.

Taxes are what we pay for the privilege of living in this country. They are what allow us to drive on the roads and have protection from fires and crimes. They give us a system of justice to punish people who commit those crimes. They help settle disputes. They keep the flow of commerce going between the states and into other nations. They guarantee an educated populace. They keep farmers solvent when national policies hurt their bottom line. They pay for scientific and medical breakthroughs. They keep hospitals open in rural areas. They provide for beautiful parks. They help planes to land safely and trains to cross the country without crashing into each other. They help feed people in need. They protect us from companies that are willing to sacrifice the health and well-being of employees or customers. They make sure the food we eat and the air we breathe are safe. They keep the country safe from those who would do us harm.

We all enjoy the benefits of the taxes we pay. Which is why I’m not certain I want to subsidize a small group of people who suddenly find they don’t have to pay as much, while still reaping the same rewards.

I’m not going to cut out tipping entirely — these workers still need and deserve the extra income. I’m just going to cut back a little.

I don’t want to penalize them for this sudden privilege they have been bestowed. But I also don’t want to enable what amounts in my mind to tax avoidance.

Typically, I leave 20% or a little more. That was generous when the standard tip was 15%, but it became the norm during the COVID pandemic when waiters were serving fewer people.

Servers still pay taxes on their nontipped income, of course. In Missouri, that’s a minimum of $6.875 per hour (that extra half-cent per hour is hilarious). Illinois is more generous, with tipped employees 18 and older being paid at least $9 per hour.

If tips don’t bring them up at least to minimum wage — $13.75 per hour in Missouri, $15 in Illinois — then the employer is required to make up the remainder. In other words, tipped employees always pay taxes on at least half of the minimum wage in Missouri and 60% of it in Illinois.

The rest of their income, if they have any, is the part that will no longer be taxed. And back when these servers were pulling their own weight, which is to say last year, they only had to pay a relatively small portion of that amount in taxes.

My point is, I’m thinking of cutting back my tips to 15% of the check, or maybe 18%. Just enough to offset their new, tax-free status. Just enough to keep them honest.

Which brings up another, unrelated point. A lot of politicians seem weirdly fixated on limiting the IRS’ ability to investigate people who cheat on their taxes.

Is it just me, or do you assume all of those politicians cheat on their taxes?

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