Trump’s ‘No Tax on Tips’ Pledge Could Shape His Political Destiny – The American Spectator | USA News and PoliticsThe American Spectator

“No tax on tips!”

This was the battle cry of Trump’s successful 2024 campaign.

Yes, there was “Build the wall!” But that was background, part of the familiar chorus, an old favorite. 

The 2024 Trump campaign was, after all, a sequel. The second sequel. 

“No tax on tips!” was new, shiny, and easy to understand. It was Donald Trump.

This was not Jack Kemp and Art Laffer explaining the (terribly important) Laffer Curve as the driver of tax policy. It was not an important but difficult to understand or communicate demand that private equity remain taxed at capital gains rates.

Fourteen million Americans derive some of their income from tips.

And then there are the tens of millions who are now 30 or 50 or 70 years old who remember every significant tip they received as a bartender, waitress, card dealer, or valet parker.

Unlike a salary that comes in the mail or is delivered into your bank account after the workweek, regardless of whether you had a good or bad week, the tip is immediate recognition and reward for your work. Right now. At this moment. The connection between work and pay is immediate and direct. And, at this moment, the government steps in and takes its toll.

That should end, and Trump agrees with you. He values your work and feels your pain. In fact, the only new tax cut that is guaranteed to pass this year is the removal of the tax on tips. A key sign that is moving forward is that Texas Senator Ted Cruz and Montana Senator Steve Daines have drafted and now revised legislation to end the tax on tips.

The president and chair of the Ways and Means Committee, Missouri Representative Jason Smith, and the committee chair of the Senate Finance Committee, Idaho Senator Mike Crapo, agree that the tax bill will pass under reconciliation rules (no filibuster allowed). This will make the 2017 Trump tax cuts permanent.

Backing up a moment, just what is in that Trump tax cut that reduced the tax burden on Americans by $4.7 trillion over the last decade?

Most of these tax cuts will expire on December 31, 2025, resulting in an across-the-board tax increase totaling $4 to $5 trillion over the next decade if the tax cuts are not reenacted and extended.

The 2017 Trump tax cut — also known as the Tax Cuts and Jobs Act — nearly doubled the standard deduction from $6,500 to $12,000 for a single tax filer and from $13,000 to $24,000 for a married couple. This is a massive tax and paperwork simplification for households. Thanks to the tax cuts, 90 percent of households now take the standard deduction, up from about 70 percent prior to the tax cuts.

This means thirty million households that formerly itemized their deductions no longer need to deal with the proverbial shoebox full of receipts during tax season and do not need to file any receipts for charitable contributions.

Trump’s tax cuts doubled the child tax credit from $1,000 per child to $2,000 per child.

They also decreased the corporate income tax from 35 percent (the highest in the world) to 21 percent. This was made permanent.

The tax cuts additionally provided a 20 percent tax deduction for the five million businesses whose owners pay business taxes through their personal income. This allows Main Street employers, such as Subchapter S corporations or pass-throughs, to have a more competitive tax rate compared to corporations.

The Tax Cuts and Jobs Act allowed business investments to be fully expensed, replacing lengthy depreciation schedules. This reduced the cost of capital investment.

Trump’s tax cuts also reduced the death tax so that the first $11.2 million (single filers) or $22.4 million (couples) you leave to your children is tax-free.

The tax cuts even eliminated the Obamacare individual mandate tax penalty that hit millions of low- and middle-income households.

Can the Trump tax cut be extended permanently?

Yes. Senator Crapo, the chairman of the Senate Finance Committee, released a letter making clear that the Senate would not consider any tax legislation that did not make the extension of all the Trump tax cuts permanent. This is huge. Very huge. It means the tax reductions of 2017 will not need to be reenacted every decade.

Businesspeople can plan for the future with greater certainty on what their tax rate will be and how quickly they can expense new investments as well as research and development.

The solution is to extend the tax cuts based on “present policy” rather than “present law.” Present policy maintains most of the Trump tax cuts, and extending them into the future does *not* require any “offsetting” tax increases. In contrast, under present law, most of the Trump tax cuts are set to expire at the end of 2025. Making the tax cuts permanent would require offsetting tax hikes of $4 to $5 trillion for the next ten years, and again every ten years thereafter. The House bill is based on present law and is therefore effectively irrelevant to Senate and House leadership, as well as the White House.

Who will oppose such a wonderful collection of tax cuts?

Every single Democrat. They want the money and more.

The media will work hard to repeat the lies they told in 2017: that the tax cuts did nothing for working Americans and were solely intended to benefit big corporations and the rich.

They have a problem. After they lost the fight in 2017 and the tax cuts became law, the major media outlets, in an attempt to belatedly regain some sense of self-respect, admitted in print that Trump cut taxes across the board:

New York Times: “Most people got a tax cut.”

Washington Post: “Most Americans received a tax cut.”

CNN: “The facts are, most Americans got a tax cut.”

FactCheck.org: “Most people got some kind of tax cut.”

Americans for Tax Reform compiled more than 1,200 in-their-own-words testimonials from businesses in which they cited Trump’s tax cuts as a key factor in pay raises, job creation, and facilities expansion.

The other argument from the Left in Congress and the media — that the corporate income tax cut would lead to revenue loss and primarily benefit corporations — now faces two problems.

First, back in 2017, the Congressional Budget Office predicted that, without a tax cut, the corporate income tax would generate $405 billion, while with the tax cut, it would raise $421 billion.

In fact, in fiscal year 2024, the corporate income tax raised $529 billion, more than $100 billion above what the Congressional Budget Office had projected without the tax cut.

And what happened to workers when the corporate income tax rate was cut? A year later, in 2019, the median family income increased by 6.8 percent in one year. Wages rose as companies had more capital per worker to make them more productive. Wage increases driven by productivity increases are sustainable — they continue year after year.

One piece of good news is that Americans increasingly understand that taxes on businesses ultimately fall on workers, who face lower wages, and consumers, who pay higher prices. There is no Mr. General Motors who writes a check to the government. Business taxes are paid by people. Workers, consumers, retirees, and savers.

In theory, Congress could pass two reconciliation bills, and some White House staffers have suggested just that. The first would pay for border security, more defense spending, and changes in energy policy. The second bill would supposedly deal with taxes and spending.

The problem is that there are a number of House members who care deeply about border security. Or perhaps more accurately, they care deeply about being seen as “with Trump” on border security. But they have no interest in voting for any tax and spending bill. Three “no” votes on the tax cut in the second package would kill the permanent tax cut and result in an immediate $5 trillion tax hike (give or take) over the next decade.

In February, Trump — increasingly unhappy with those calling for two bills, knowing they were killing his tax cut — blasted out a tweet demanding one bill that will make his tax cut permanent.

That is what Congress will give him.

That and “No tax on tips.”

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