Hacker News Reader

Comment by r00fus | Hacker News Reader

What's to prevent corporations and the rich from taking advantage of this? ie, my job is $10k + rest in "tips"?

The easiest seems like who is paying the "tip". If it's your employer, it's taxable compensation. If it's a customer, than it could be a tip.

Then there would probably be a bunch of sub-bullet points defining whether a tip is taxable depending on whether you have a direct relationship with the customer tipping you, whether the "tip" is mandatory, or at the discretion of the customer, are you in X roles (e.g. barista) within Y industries (e.g. food services).

Okay, I hire a contractor to remodel the bathroom and I pay $1k and $10k in tips. I am the client.

I think that's all taxable compensation even under the "no tax on tips" policy suggestions.

And now you've understood why every handyman job is on paper $1 under the limit at which they need a trades license.

Easier way is to put a cap on how much you make. Let’s say 70k. Make more you don’t get the exemption prevents the rich from gaming the system.

Also define tips by industry. Service sector. End of story.

If you put a cap on income, then both you and the IRS need to maintain a record of the tips you received, to prove that you’re on the right side of the cap.

I don’t think that saves much in administration costs.

Can you deduct tips paid as a business expense?

IANYTA but yes, it's a deductible expense just like the business meal.

I am not your true accountant?

Close! Not your tax accountant

Yeah, maybe unintuitive, but even if it costs more to collect and enforce taxes than you get from taxes, it also has a preventative side to not abuse it.

Reply on news.ycombinator.com