Rep. Steven Horsford introduces bill to eliminate taxes on tips, abolish subminimum wage

A new proposal from the Democratic congressman  seeks to go beyond Trump’s campaign promise of cutting taxes on tips by also eliminating the subminimum wage, which allows some workers to be paid as low as $2.13 per hour. 

Amid a national push to eliminate federal taxes on tipped income, Nevada Democratic US Rep. Steven Horsford is making a renewed push for legislation that would outlaw the practice of paying tipped workers below the federal minimum wage. 

Horsford last week moved to reintroduce the Tipped Income Protection and Support (TIPS) Act, legislation that would eliminate the separate, existing federal minimum wage for tipped workers, which is set at just $2.13 per hour. If enacted, the bill would also establish provisions to restrict the ultra-wealthy from giving cash gifts to family members under the guise of a tip. 

And like other federal proposals to eliminate taxes on tips, which President Donald Trump first floated during a campaign stop in Las Vegas last summer, Horsford’s TIPS Act would also eliminate federal income taxes on tipped income. 

Tips, Horsford told The Nevadan during a recent phone interview, “have supplanted the working wage for millions” of workers nationally, especially in recent years as tipping has become more encouraged at all types of businesses — particularly in the hospitality and dining sectors. 

That puts the onus on customers, not employers, to pay the bulk of an employee’s salary, Horsford said, even if those workers are struggling to make ends meet. 

“We believe that one job should be enough, and there should be one fair wage where workers are able to provide for themselves and their family,” Horsford continued. “Workers in some states are paid as little as $2.13 an hour, and predominantly, these are women and people of color working in local diners and restaurants who are not paid a livable wage.” 

Nevada is just one of 10 states nationally that require employers to pay tipped workers the full state minimum wage, which is currently $12 per hour. At least 35 states allow tipped workers to earn below the federal minimum wage, which is $7.25. 

Horsford’s bill would also allow tipped workers the option to continue paying into Social Security. In contrast, a Republican-led proposal to eliminate taxes on tips being carried by Sen. Ted Cruz of Texas (called the No Tax on Tips Act) would allow tipped employees to deduct their tips from their taxable income, but would retain the subminimum wage. 

“A tip is a gift, not a guarantee,” Horsford said. “And it’s beyond time that we recognize that in our tax code.”

Horsford’s bill so far has only been endorsed by a handful of House Democrats, including Reps. Dina Titus and Susie Lee of Nevada, and faces an uncertain future given Republican control of the House. It’s also earned the support of Culinary Local 226 — Nevada’s largest union of hospitality workers — as well as advocacy groups like One Fair Wage. 

“Culinary Union urges all elected officials in Nevada and across the country to join in supporting this crucial pro-worker TIPS Act legislation,” Culinary Union Secretary-Treasurer Ted Pappageorge said in a statement. “It’s outrageous that many companies across the country still pay tipped workers as little as $2.13 an hour. The legislation that Congressman Horsford is championing will uplift millions of workers, including many in Nevada, by eliminating federal income taxes on tips and ending the sub-minimum wage.”