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Republican candidate for president Ron Paul talks during an interview at the Venetian Tuesday, October 18, 2011.
Tuesday, Jan. 31, 2012 | 2 a.m.
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.
Income Taxing in the U.S. is a voluntary act. It can not be a forced or taking tax because that would make the government a criminal and since we are the government we can't all be criminals. No law or amendment to the Constitution can make taking property by force an innocent event. It is criminal no matter who does the taking. If tax collectors carry guns then it is assumed they are going to take the so called "tax" by force. In the law that is called armed robbery. On top of all that a tip is a gift and even the tax code lays the burden of a tax on a gift to the giver. The recipient of the gift is never taxed. I never give a tip. I only give birthday gifts to people who wait my table. I don't care if I am late or early with the gift. Vote for Ron Paul who wants us all to pay zero income tax. The only honest income tax.
Most tips in major casinos (as an example) are pooled, and divided amongst ALL the hourly employees in the department (Table Games, Slots, etc.) The IRS has been using automatic withholding on estimated tip earnings for years and years. This began when dealers, cocktail servers, etc. tried to game the system by not claiming what they were really making in tips. Where was Paul when the IRS began this procedure? As for Income Taxing in the U.S. being "voluntary" LOL. Try not paying your taxes and see how that works out for you. It isn't and never has been "voluntary"
If the Tax Free Tips Act were ever passed my immediate response would be to reduce the amount I am tipping. I too need additional funds to put toward things like my house or car payment, my retirement, etc...
@ Gary Lind Thanks for making my point. So why do we have the government involved in armed robbery? Because people fear the government. Get over your fear Gary because that is really the only tool armed robbers have to force you in to compliance with their crime. Also work to elect Ron Paul and do away with the criminals. We should not have them and they only exist because non of the other people in congress have the courage to get rid of them.
Didn't Wesley Snipes test your theory? How did that work out for him?
http://www.backtaxeshelp.com/tax-blog/ta...
This idea can work, what has to happen however is to decide as a nation if we are to live within our means and adhere to the constitution. We also cannot be in 135 nations with 900 bases to the tune of over 1 trillion a year.
Nevada can lead on this issue if they choose to do so for obvious reasons. You already to not pay a state tax.
RON PAUL 2012
"Vote for Ron Paul who wants us all to pay zero income tax."
--------------------------
Libertarians and their beliefs, they never fully meet reality AND they don t seem to care why.
Selah..
If tips are not declared as income, then the employee's eventual monthly social security check will be based only on the low hourly wage. If tips are declared but not taxed, then employees will vastly increase the declaration to build the retirement check.
Beyond this, it's surprising that Ron Paul, a consistently straight-shooter, would pander for votes in Nevada.
@Gary Lind "Where was Paul when the IRS began this procedure?" Opposing it as he is today. Why didn't anything change? Because GOP leadership and most in the GOP love the income tax and love big spending as much as Dems.
There are other ways to fund the government besides the income tax. It is regressive and repressive. It's more about controlling you than it is about revenue. But to end it, will require that we cut back on both military spending and entitlement spending. Paul is the only candidate in either party that realizes we can't continue to borrow money from the Chinese indefinitely.
Paul stands apart and alone as someone who would change big government oppression whether its the IRS bullying the little guy or the TSA bullying tourists so they don't want to travel. Stand with him and change the GOP and then change Washington.
We do not NEED an income tax, nor do we need a TIPS tax. The Federal Government WASTES our tax money. Lets get rid of these taxes and KEEP our money at home, in our states, instead of sending it off to Washington. Stop believing the LIE and PROGRAMMING that an income tax is necessary for the Federal government to operate.
I think I'm ging to puke.
Gee.......how simple Ron Paul's thinkingn is!!
Now Doctors, lawyers, cpa's, engineers, architects, dentists and pretty much everyone else can reduce their fees to a few hundred dollars and accept a nice big tip for the rest!!!
Now a root canal will cost $200 and the tip can be $2800!.......only $200 taxable!
"If tips are not declared as income, then the employee's eventual monthly social security check will be based only on the low hourly wage."
It would never occur to a droid like yourself that all of the money saved in taxes over those years would more than make up for a deficit in SS income later on (which may not even exist at that point or in the same form).
"Now Doctors, lawyers, cpa's, engineers, architects, dentists and pretty much everyone else can reduce their fees to a few hundred dollars and accept a nice big tip for the rest!!!
Now a root canal will cost $200 and the tip can be $2800!.......only $200 taxable!"
Wonderful. The less the IRS gets, the better. You whores to the State are really pathetic.
RedRockDealer is onto something here, in replying to Bertsos's fear that "rich" people will merely lower their fees to escape taxation. Bertsos should not have such a knee-jerk fear of the free market. Imagine what would happen if your doctor or dentist or lawyer did charge only a token fee, in hopes of avoiding the taxation. He says that like it's a bad thing. Remember, the fee, which can be taxed, is contractual. You can be sued in court for non-payment of the fee. The tip, on the other hand, is entirely a gratuity! No waiter can take you to court and demand a better tip from you, or any tip at all. Chew on that for awhile. Such a system would almost single-handedly reform the outrageous price bloat afflicting the entire medical goods and services industries. I'd negotiate an entirely voluntary fee-and-tip payment with my dentist, and I'd voluntarilly pay it too, so that I could keep enjoying her services! She would get to avoid the taxation and keep more of what she earned, even if this were significantly lower than her prior total for-taxation hundred percent fee charge, and I would get a much lower total bill. What a win-win situation. Think about it.
I really wish that Mr. Paul had the support to win. I'd vote for him in a second. Go Ron, hang in there.
>>> If the Tax Free Tips Act were ever passed my immediate response would be to reduce the amount I am tipping.<<<<<
I would do just the opposite knowing that none of my tip money was going to fuel the out of control government and the worker was going to get to keep it all and put this money back into the economy instead of being sucked into a black hole by the government !
Romney and Newt have convinced me that they are both exactly what we don't need in DC, they are both part of the elite political class that has put this country in the position we now find ourselves in.
We need a radical change to save America, Ron Paul IS that radical, he has my vote!
By RobertL -- RedRockDealer is onto something here, in replying to Bertsos's fear that
>>>>>>>>>>>>>>
To cure the high cost of medical care all we have to do is ban any and all forms of insurance!
Right away you take 25-30% of a doctors and Hospitals costs of dealing with insurance companies out of the equation. Doctors and Hospitals could then set up accounts for their patents to make monthly payments on just like Doctors and Hospitals did for the 1000's of years before the insurance industry forced it's "insurance" on everyone!
This is the simplest way to get affordable healthcare for EVERYONE! And, without government interference!
Ban ALL insurance!
Under Ron's logic then my bonus should not be taxed either. I have no guarantee of a bonus and it is all dependent upon how well I satisfy my employer.
Tipped employees still make much more in tips then they report and are taxed, it is still income. Under Ron's logic, casino workers making $40 to $50 K a year will only pay on their wages.
Ron's article is just a poorly disguised ploy to attract service workers to support him at the caucus.
Do people like Ron Paul and other Tea Party types not realize that their advice virtually will create a problem like what Greece is going through?
You can't run a country without collecting taxes somehow. Yes, it would be nice to not pay taxes, but then it would be total anarchy.
I suspect few employees actually claim the real tips they make, rather they take the government estimate. Lets face it if there was no money in the jobs they would not do it, check out crop pickers for instance, not many apply for that job they have to bring in people from Mexico. I am guessing those underpaid tip workers are making their share of the cash and you do not need an real education to earn this kind of money, only hustle..
samjung23: you jest, yes? greece had enormous taxes and a huge government job sector....and this got them where? you are correct that you can not run a nanny state or a warfare state (or both) without enormous taxes. you also will stagnate prosperity with that scenario (feel familiar?). you CAN run a state with LOW spending and LOW taxes, freeing up capital (capital can only come from savings, not borrowing) to invest in growth and jobs. lesson over.
Well, I was reasonably supportive of a lot of what Ron Paul had to say but this is an insult to those people that pay tax on all their income.
Why should tip earners not have to declare all their income? Better yet, since most are in tip pools and the casinos know exactly what they are earning in tips each shift I think it is time for them to start paying taxes based on their real income and not the reduced amount they have gotten away with for years.
This is just another "special category" exemption and exemptions are nothing but pandering to a political group. There is nothing fair about it.
RE David K. Ron Paul may have been fighting all along to not tax tips as income, however he is one lonely voice in the wilderness. His proposed bill has NO CHANCE OF EVER BEING ADOPTED OR PASSED, and if it was passed in the house, it would be DOA in the Senate. As for Income Tax, I recommend you read the 19th amendment to the US constitution. You have the right to not pay withholding on your wages and any other sources of income, and the IRS has the constitutional right to come after you at the end of the year. Deal with it. All income is reported to the IRS: wages (including tips),income such as dividends,interest,capitol gains, and on and on. Fair or not, the IRS gets this information from your employer, your bank, any companies that pay you interest or dividends, and the list goes on. Nobody "controls" me. I accept and pay any tax liability I owe. I make money on dividends, interest, government retirement,and social security. Why should I not pay what I honestly owe? I live quite comfortably. My taxes are paid for 2011, and I am getting a refund. I am a retired happy camper who believes there's no free lunch when it comes to taxes. I PAY THEM, AND MOVE ON!!!
RE Peter Fritz. Most toked employees in casinos have no say in what they make in tokes. The tokes are dropped in a toke box when received, and collected at the end of their shift, placed in a locked "bank" and normally tallied at the end of the 24 hour period that they were collected. Hustling is prohibited and has been for as long as I worked in the casino biz (23 years), beginning in 1988. The old school hustling, and every man for himself, is long gone, and good riddance. No customer wants to be hustled for a toke, and the current system makes it an even distribution of monies collected as tokes. If the total tokes an employee makes exceeds the IRS estimate, good for them.
I am not a ron Paul fan. But I do agree with him on this issue. Tipping is not a guaranteed income. I have food servers that have been stiffed on a $600 bill or greater,so by taxing that food server on a un-realized financial gain is forcing a employee to occasionally have to pay for the privilege to service a guest is obscene.
Regarding my post at 1529 hours. It is the 16th amendment to the US constitution that refers to income taxation. My bad.
Reply to RedRockDealer: Droid like myself says that if taxes paid into the social security system are more than the retiree gets back from it, why is it broken and in need of fixing?
Yeah, Mike, it happens. Hell, it happened to me when I was young. It was a real pisser to pay taxes for the pleasure of serving some jackass from Europe who stiffed me.
That said, I always averaged more than the 8% in tips I was paying taxes on.
I'm not opposed to paying my share. I just think everyone should feel the burn. Including the ultra-rich.
I'm salaried now. I paid a little bit more than 10k in FIT last year. I'm always interested to hear what others are paying, so please chime in.
Why just stop taxing tips?
ALL taxation should be criminalized for what it is THEFT!
There is nothing FAIR or MORAL about THEFT.
If an entity can't function in the absence of theft through taxation, then the entity doesn't deserve to exist.
Taxation is an antiquated practice of suppressing civilization while breeding the evils of graft, corruption and power.
There are numerous alternative methods of funding/financing entities without employing theft/taxation.
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Next opinion.
Around $13 thousand from 2010. Personally I believe in a flat total tax rate of 20% from $25 thousand up and a 5% sales tax that would at least get some tax revenue from the poor and say service industry personnel who may escape reporting all there income from non-guaranteed tips. Just a idea.
I wish I knew he was at GVR. I would have supported RonPaul. He can fix America.
Ron Paul didn't say "Don't pay taxes." He said that he wants to make a LAW that eliminates the tax on service-industry wages.
He's the only candidate who is offering to bring Our Constitution back to the White House.
No one else will.
No complaining if you don't like the result of a country that sacrifices its freedom for the illusion of security.
Ron Paul
Nevada's Senior US Senator, Harry Reid, says that paying US Income Tax is voluntary: http://www.youtube.com/watch?v=R7mRSI8yW...
So, can I just stop paying?
I cannot understand how anyone can read this and think negatively towards Dr. Paul.... this man is running for president, saying "I dont want to tax you, you earned that money, you should keep it!" Thats amazing and regardless of what "side" your on.... we need more politicians like this.
Ressince, that's nice that you're okay with the government using force to take your money from you to give to their banking friends, or just in their own pockets, or war, but I am not okay with that! The constitution clearly says "apportioned taxes"..... the income tax actually has only been around for 100 years or so, it has NOT always been like that. Who cares if this bill passes? Thats Paul's Fault? Why should you make it a negative point that the other minions on capital hill are bought out and would never support a sensible bill to provide hardworking with the fruits of their labor?
Pat Zamora, why would you tip less if this bill passed? What the hell does one have to do with the other? The server will probably be more inclined to provide better service so they can keep more tips. YOu tipping less just means your're cheap.
Why do you people feel the need to "determine" what is a "fair" amount to be taxed. If I did this, its called theft..... the government does it, its called taxes. This is not a matter of opinion, its a matter of economic and political principal. I do not support where my money goes, so I'd like to keep because I can do better. period.
VOTE RON PAUL .... if you want to keep ALL the fruits of your labor, end the drug war, create a more sensible foreign policy based on peace and diplomacy, expand states freedoms, repeal the patriot act, NDAA, and restore personal freedoms in this country! RON PAUL 2012
I can tell you, after working many, many years in the service industry, that you are "forced" to claim a percentage of your sales and you are taxed on that amount. Let's say I would sell $5,600 worth of food and drinks (that would be $112 *IF tipped 20%), then I will have to claim 13% ($72) of it as tips made. However, you aren't ever leaving the restaurant with that taxed 13% because you have to tip out the people that helped you work that night. So, if I made my 20% of tips on that 5,600, and I had that $112 dollars in hand - I have to tip the busboy (tax free by the way) 20 percent of the cash in hand, that's 22 dollars. Then another 10% of cash in hand goes to the bartender, that's 11 dollars. Then 5% to the hostess which is another 7 dollars. In an ideal world you are receiving 20 percent tips all the time nonstop because in theory being taxed 13% works and I wasn't taxed on one WHOLE dollar. Reality is, YOU ARE NEVER MAKING 20% ALL NIGHT LONG - and you are paying more taxes than is fair. I also have huge issues with tipping out people that aren't getting taxed on their tips cause I, on a very bad night, was the one paying on that. This system has to change. Anyone here arguing that this is insane hasn't ever worked in the industry, obviously. **To be noted, 13% is what I was taxed on in my state and that may vary from state to state.
I really like Ron Paul and would vote for him. Although I do disagree about paying taxes to a small degree. I believe in paying tax for our millitary and a keeping up on national parks. Other than those, most of my tax dollars is flushed down the toilet to bail out millionaire bankers for loosing money and crashing the ecconomy. I do not like paying taxes for the government to tell me how to live my life. Military and national Parks I'm willing to pay for. 99% of the other programs are bs.
"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!"
Insult to injury? Really?? I'm a tax professional, and know many "service-sector workers" who are subject to the TCA ("tip compliance agreement") that the employer and the IRS agree to (it is not an IRS estimate, but an amount agreed to with the IRS AND the employer). I have yet to see a single example of the TCA amount being more than the actual tips received. In my experience, in every case, whether it be waiter, cocktail waitress, dealer, valet, etc., the TCA amount has always been less, often significantly, than the actual tip income.
Whether to tax tips or not is a valid question. But to assert, as Rep. Paul does, that these workers are being taxed on more than they receive is factually incorrect, and more than misleading.