Who Won the U.S. Presidential Debate?

Eliminating taxes on tips—an idea supported by both major party 2024 presidential candidates—could benefit some service workers but the overall impact may not be that dramatic, says a Virginia Tech expert.

There are roughly 4 million workers for whom tips make up a significant portion of their income. However, more than a third of those workers don't earn enough to end up owing federal taxes.

"While the idea of tax-free tips sounds appealing, the actual economic benefit for many might be less significant than supporters suggest," said Virginia Tech economist Jadrian Wooten.

Wooten says that while eliminating taxes on tips would certainly benefit some service workers, the impact would be fairly concentrated, impacting certain states more than others, particularly the important swing state of Nevada.

Earning the support of the culinary union and its workers could prove vital. "For politicians, winning over this organized and vocal constituency can provide a significant electoral edge," said Wooten.

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