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Las Vegas Sun - Ron Paul: Stop Taxing Tips


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By Representative Ron Paul

During any presidential election year, taxes are sure to be a large part of the debate. That's especially true during these tough economic times.

One side argues that high-income earners aren't taxed enough and advocates higher taxes on this group to balance our budget and get our economy moving.

The other side argues that taxes are too high and advocates for lower taxes on businesses, high-income earners and virtually all Americans as a way to stimulate our economy.

But there's one sector of American workers who are often overlooked by both sides during the never-ending debate on taxes.

That's service-industry workers, who, despite often being underpaid and overworked, are always overtaxed.

According to the Nevada Department of Employment, Training and Rehabilitation, there are more than 300,000 service-industry workers in Nevada -- nearly 30 percent of the entire state workforce, which is larger than any other sector.

The truth is the majority of service-industry workers are paid low hourly wages and are expected to earn the rest of their income from tips. However, unlike regular wages, a service-sector employee usually has no guarantee of, or legal right to, a tip. Instead, the amount of a tip usually depends on how well an employee satisfies a client. But even good service doesn't always guarantee a tip -- especially during tough economic times.

Not only that, but tips provide a substantial portion of the income of many service-sector employees, many of whom are young people just trying to make a few extra dollars to get through school or single parents often balancing two jobs while trying to make enough to raise a family.

That's why it's an outrage that waiters, waitresses and other service-sector employees have to pay taxes on the tips they earn. And to add insult to injury, the IRS makes an estimate of how much service-sector workers will make in tips and taxes them on it even if the taxpayer did not actually earn as much as the IRS estimate!

This is a serious problem that must be addressed, but I'm the only candidate running for president who is working hard to fix this problem.

In fact, I've introduced the Tax Free Tips Act in Congress, which would exempt tips from federal income and payroll taxes, meaning no more taxes on tips. That's because I understand ending taxes on tips will give these workers a pay raise, letting them keep more money to put toward things like a house or car payment, their retirement, or their own and/or their children's education.

If elected president, I will end this injustice on service-industry workers all across our nation by abolishing all taxes on tips once and for all.

Helping Americans improve themselves by reducing their taxes will make our country -- and our economy -- stronger. I think that's something we all agree must happen if we are to fix our economy and get America back on track.

Ron Paul is a 12-term congressman from Texas. He is running for the Republican nomination for president.

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