Former President Donald Trump’s proposal for eliminating tipped wages from taxable income didn’t originate from extensive research or policy experts.
It came from a more usual source: an unnamed waitress he recently encountered.
That’s according to Republican senators who recounted remarks made by the presumptive GOP presidential nominee Thursday during a closed-door meeting at the campaign headquarters of Senate Republicans on Capitol Hill.
“The funniest thing he talked about, in my mind, was how he came up with the brilliant idea of exempting tips from being taxed with the income tax,” Sen. Kevin Cramer (R-ND) said. “He would like to tell you that was incredible research and policy discussion. But the secret is he got it from a waitress.”
Sen. Josh Hawley (R-MO) confirmed the telling of Trump’s tale.
The Trump campaign did not respond to a request for comment about when or how the candidate formulated the idea.
At a campaign rally in Las Vegas over the weekend, Trump pledged to Nevada voters he would eliminate federal taxes on tipped wages.
“Hotel workers and people that get tips, you’re going to be very happy because when I get to office, we are going to not charge taxes on tips,” Trump said. “We’re going to do that right away, first thing in office.”
The IRS proposed a new wage reporting program last year for service industry workers who heavily rely on tips, causing an uproar from Republican lawmakers that low- and middle-income taxpayers could be targeted for audits after Democrats in 2022 approved billions in new funding to the agency.
The Service Industry Tip Compliance Agreement would be voluntary to replace other reporting programs between the IRS and service industry employers. The proposal would use tips reported through point-of-sale systems and electronic payment methods “to improve tip reporting compliance,” according to the agency.
IRS officials have said the vast majority of new tax enforcement via audits will be directed toward the wealthiest people in the highest tax bracket.
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“[Trump] said, ‘I’d love everybody to believe that this was real expensive, intense research, that we did,’” Cramer recalled Trump saying. “[The waitress] said, ‘They’re coming after my tips,’ and he said, ‘Really?’”
Cramer said the topic came up during the meeting because Sen. Tim Scott (R-SC), who is on Trump’s short list for vice president, raised the issue of Republicans appealing to working-class voters.