Vice President Harris surprised many Democratic lawmakers and progressive activists by supporting a proposal initially suggested by former President Trump to make tips for service and hospitality workers tax-exempt. This idea, which Democrats had previously criticized as a "bogus" tactic to win votes, is now being seen as Harris's strategic move to secure votes in Nevada, a crucial swing state where service workers hold significant influence.
However, key Democratic figures and progressive groups are concerned about the proposal’s impact, arguing that it may neglect many low- and middle-income workers who do not receive tips but still need tax relief. Policy experts are also skeptical, questioning how the proposal could be implemented without significantly altering economic behavior and potentially increasing the national debt by $100 to $200 billion over the next decade.
Critics on the left also worry that employers might use tax-free tips as a justification to avoid raising base wages, and could even push for more tipping from customers instead of increasing hourly pay.
The proposal, initially seen as a Trump campaign ploy, is now creating unease among Democrats who did not anticipate Harris’s endorsement. Senior members of tax-focused committees in Congress had dismissed the idea when Trump first brought it up, viewing it as unserious and potentially harmful to low-wage workers.
Senate Finance Committee Chair Ron Wyden and Rep. Lloyd Doggett were among those who criticized Trump’s idea, with Wyden calling it “bogus” and Doggett labeling it an “election-year ploy.” Even when Trump proposed it in June, key Democrats and policy experts expressed doubts about its feasibility and potential consequences, such as employers exploiting the system by shifting more compensation to tips.
The Harris campaign, facing criticism, pointed to support from key Nevada Democrats and labor unions, including the Culinary Union, which sees the proposal as beneficial for hospitality workers. The White House has indicated that President Biden would sign such a bill if it reached his desk, but Harris's unexpected endorsement has left many Democrats uncertain about her stance on major economic issues.
While Harris had previously aligned with progressive policies during the 2020 presidential primaries, her recent move suggests a shift that has left some progressives concerned. They are now awaiting more details on her economic platform, particularly on whether she will maintain or diverge from Biden’s policies.
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