Reps. Matt Gaetz (R-FL) and Thomas Massie (R-KY) unveiled legislation on Tuesday that would eliminate taxes on tips, Breitbart News has learned exclusively.
Gaetz and Massie introduced the Tax Free Tips Act to provide financial relief to service industry workers by scrapping federal income and employment taxes on tips. Rep. Marjorie Taylor Greene (R-GA) cosponsored the bill.
The two Republican lawmakers proposed the bill after former President Donald Trump first called to eliminate taxes on tips during a rally in Las Vegas, Nevada in June.
“So, this is the first time I’ve said this. And, for those hotel workers and people that get tips, you’re going to be very happy. Because when I get to office, we are going to not charge taxes on tips — people making tips,” Trump said.
Gaetz said eliminating taxes on tips would help those suffering from historic levels of inflation under Biden, or Bidenflation, while Massie argued that taxing tips is regressive, or that it harms Americans who make less.
“As the cost of living continues to rise, the hardworking men and women in the service industry, many of whom may be working a second job to make ends meet, must be allowed to keep every dollar of tip money they earn. I am proud to join with Rep. Thomas Massie in co-leading this important tax-relief legislation,” Gaetz said in a written statement.
“Ron Paul had it right and so does Donald Trump,” Massie explained in a statement, noting that former Rep. Ron Paul (R-TX) had introduced the legislation in 2011.
“Taxing tips is regressive and goes against American tradition. But now digital payments allow the government to tax every transaction, even those that historically have not been taxed. With inflation raging, it only makes sense to eliminate the tax on tips and provide relief to working folks.”
The IRS requires workers to report their tips monthly to their employer if their tip exceeds $20.
Major aspects of the Trump tax cut legislation, the Tax Cuts and Jobs Act, expire next year, and scrapping taxes on tips could be one of the considerations for a future tax cut bill.
During a visit to Capitol Hill this week, Trump recounted how he first thought to propose eliminating taxes on tips.
Sen. Cynthia Lummis (R-WY) said on Thursday, “His story — it was so much fun — [was] about the waitress that gave him the idea to not to tax tips. He got that idea when a waitress was serving him a meal and said to him, ‘You know, we just got these new rules that require us to go through a tremendous amount of record keeping to report our tips and the penalties are onerous.’”
Trump reportedly asked rhetorically to the waitress, “Well why are we even taxing tips?”
“It was an indication that he just really listens to working Americans and respects their opinions,” Lummis said.
Conservatives have also backed Trump’s idea to scrap taxes on tips.
Greene wrote, “I absolutely LOVE President Trump’s plan for NO TAX ON TIPS!!”
“Listen, as a former waiter — I waited tables in college and a little bit after college — I think we should definitely do that. Waiters, waitresses, service staff — they work hard every day. They work hard, and they’re not millionaires. To go after them like that doesn’t make any sense to me,” Rep. Byron Donalds (R-FL) said.
“The tips issue is good for Trump and Republicans. Working-class voters have not been this pro-Republican since Reagan,” Sen. Kevin Cramer (R-ND) said.
Rep. Tim Burchett (R-TN) remarked, “I’m of the belief that these folks aren’t going to stuff that in a mattress or bury it in a Mason jar in your backyard. They’re going to put it back in the economy pretty quick. I would rather Americans invest that rather than the federal government steal it.”
Sean Moran is a policy reporter for Breitbart News. Follow him on Twitter @SeanMoran3.
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