Apple News In Conversation The hidden agenda behind “no tax on tips”
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Aug 14, 2025 Eyal Press, a contributing writer at The New Yorker and a fellow with the Type Media Center, dives into the implications of the controversial 'no tax on tips' provision. He reveals how this policy favors wealthier tipped workers while leaving many struggling employees behind. Press exposes the powerful National Restaurant Association's influence on labor laws and their long-standing resistance to wage increases. The conversation challenges listeners to rethink tipping practices and their effects on social inequality within the service industry.
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Tax Break Mostly Helps Higher Earners
- The new law exempts up to $25,000 in tip income from federal income tax, but many tipped workers won't benefit.
- Nearly 40% of tipped workers don't earn enough to pay federal income tax and thus gain little from the change.
Subminimum Wage Locked In Since 1996
- The federal tipped minimum wage has been $2.13 since 1996 and remains frozen in many places.
- Government oversight is weak, making enforcement of tip-based wages unreliable and enabling wage theft.
Tipping Subsidizes Employers
- Tipping functions to subsidize employers because tips make up what employers pay below full minimum wage.
- Customers think they help workers, but tips often allow owners to keep labor costs artificially low.