Laurel Wamsley

Yeah, this is a tax cut that made big headlines, but it only impacts a small part of the labor market, only about 2.5% of all jobs. And many tipped workers, over a third of them, earn so little that they already don't pay federal income tax. So now there aren't too many details on how exactly all of this would work, but eliminating tax on tips would probably lead to some kind of squirrely effects.

For example, say I hire a guy to trim the tree at my house, and that's something I usually pay him $500 to do. Now he might tell me that it costs $300 to trim my tree, but that he expects a $200 tip, knowing that he won't be taxed on that portion of the income. We could see tipping proliferate into places we haven't seen it before.

For example, say I hire a guy to trim the tree at my house, and that's something I usually pay him $500 to do. Now he might tell me that it costs $300 to trim my tree, but that he expects a $200 tip, knowing that he won't be taxed on that portion of the income. We could see tipping proliferate into places we haven't seen it before.

For example, say I hire a guy to trim the tree at my house, and that's something I usually pay him $500 to do. Now he might tell me that it costs $300 to trim my tree, but that he expects a $200 tip, knowing that he won't be taxed on that portion of the income. We could see tipping proliferate into places we haven't seen it before.

And employers could also attempt to reclassify employees as tipped workers and drop their pay to the tipped minimum wage. And for that, the federal minimum wage right now is $2.13 an hour. And like the 2017 tax cuts, this would blow another hole in the federal budget. This one would cost us about $100 billion over 10 years. Trump also says he would stop taxing Social Security benefits.

And employers could also attempt to reclassify employees as tipped workers and drop their pay to the tipped minimum wage. And for that, the federal minimum wage right now is $2.13 an hour. And like the 2017 tax cuts, this would blow another hole in the federal budget. This one would cost us about $100 billion over 10 years. Trump also says he would stop taxing Social Security benefits.

And employers could also attempt to reclassify employees as tipped workers and drop their pay to the tipped minimum wage. And for that, the federal minimum wage right now is $2.13 an hour. And like the 2017 tax cuts, this would blow another hole in the federal budget. This one would cost us about $100 billion over 10 years. Trump also says he would stop taxing Social Security benefits.

What sort of effects would we see from that? Well, for most current retirees, it wouldn't have any effect. Only about 40% of people who get Social Security pay federal income tax on it. But again, the effects of this change would be huge and it would make things worse for those of us who are still years away from drawing Social Security.

What sort of effects would we see from that? Well, for most current retirees, it wouldn't have any effect. Only about 40% of people who get Social Security pay federal income tax on it. But again, the effects of this change would be huge and it would make things worse for those of us who are still years away from drawing Social Security.

What sort of effects would we see from that? Well, for most current retirees, it wouldn't have any effect. Only about 40% of people who get Social Security pay federal income tax on it. But again, the effects of this change would be huge and it would make things worse for those of us who are still years away from drawing Social Security.

That's because a big chunk of those taxes on Social Security go straight into funding the Social Security Trust Fund. So eliminating these taxes means reducing the money that's available for Social Security. And that's a program that's already at risk.

That's because a big chunk of those taxes on Social Security go straight into funding the Social Security Trust Fund. So eliminating these taxes means reducing the money that's available for Social Security. And that's a program that's already at risk.

That's because a big chunk of those taxes on Social Security go straight into funding the Social Security Trust Fund. So eliminating these taxes means reducing the money that's available for Social Security. And that's a program that's already at risk.

If no one pays taxes on their Social Security benefits, that fund is going to run out sooner, perhaps two years earlier than it's already on track to do. That is NPR's Laura Walmsley. Laura, thank you. You're welcome.

If no one pays taxes on their Social Security benefits, that fund is going to run out sooner, perhaps two years earlier than it's already on track to do. That is NPR's Laura Walmsley. Laura, thank you. You're welcome.

If no one pays taxes on their Social Security benefits, that fund is going to run out sooner, perhaps two years earlier than it's already on track to do. That is NPR's Laura Walmsley. Laura, thank you. You're welcome.