NY Service Industry INFURIATED With Governor

Hand placing dollar bill into a tip jar.

Governor Hochul’s refusal to embrace Trump’s “no tax on tips” policy has sparked outrage among New York’s restaurant workers.

Story Highlights

Trump’s “No Tax on Tips Act” aims to exempt tipped income from federal income tax.
Hochul and New York Democrats have not adopted this policy, focusing instead on wage and enforcement measures.
Frustration grows among tipped workers who see an opportunity missed by Democrats.

Trump’s “No Tax on Tips” Proposal

In June 2024, Donald Trump introduced the “No Tax on Tips Act,” a key promise targeting service workers, aimed at exempting tipped income from federal income tax while maintaining payroll tax obligations. This proposal has garnered significant attention, especially among restaurant and hospitality workers in states like New York, where tipping is a vital part of the income structure.

Despite the potential benefits for workers, New York Governor Kathy Hochul and the state’s Democratic leadership have not mirrored this policy. Instead, they continue to focus on incremental adjustments to minimum wage and tip-credit rules, a move that some see as neglecting the immediate financial relief that could be provided through tax exemptions on tips.

Impact on New York Restaurant Workers

New York’s tipped workforce, which is subject to complex wage and tip-credit systems, has been vocal about the challenges they face. Workers are paid a subminimum cash wage, making up the difference with tips. The failure to adopt a “no tax on tips” policy at the state level has left many feeling overtaxed and underappreciated, particularly when other states may offer more direct financial benefits.

Commentators argue that by not adopting Trump’s straightforward tax relief proposal, Democrats risk alienating working-class service voters, potentially ceding ground to Republicans who are positioning themselves as champions of working-class tax relief.

Long-term Implications and Political Strategy

The “No Tax on Tips Act” remains a live partisan proposal, yet to become permanent law. Analysts suggest that while the policy might benefit higher-earning tipped workers, it could also entrench the existing subminimum wage system. By providing tax relief, there may be less incentive for employers to raise base wages, leaving broader structural issues unaddressed.

For Governor Hochul and New York Democrats, the decision not to adopt this policy could lead to political vulnerabilities, as restaurant workers may feel their economic struggles are not being adequately addressed. Advocacy groups continue to call for the elimination of the tipped subminimum wage, arguing that focusing solely on tax relief without wage reforms leaves workers exposed to income volatility.