DOGE caucus looks to codify Trump’s order to reduce federal workforce
DOGE caucus members announced legislation to codify President Donald Trump’s executive order to reduce the federal workforce.
The House narrowly advanced the GOP plan for President Donald Trump’s legislative agenda, kickstarting a process that could push forward Trump’s “no tax on tips” pledge and other campaign promises.
The budget resolution sets up a reconciliation bill that would extend Trump’s 2017 tax cuts and new cuts worth $4.5 trillion over the next decade. While the plan offers a budget blueprint, it does not specify which taxes to trim. It’s up to lawmakers to sort out whether they’ll have the budget to cut taxes on tips.
Here’s what we know so far about where Trump’s “no tax on tips” pledge stands.
What does the GOP plan do?
The House’s budget resolution opens the door for lawmakers to begin negotiations over how to implement Trump’s agenda, which includes eliminating taxes on tips and other tax breaks.
Extending Trump’s 2017 tax cut alone could eat up roughly $4 trillion of the $4.5 trillion limit over the next decade, according to Congressional Budget Office estimates, potentially leaving lawmakers little wiggle room to push forward no tax on tips and other proposals from Trump.
Passing Trump’s “no tax on tips” plan could be even more challenging if lawmakers fail to find $2 trillion in spending cuts over the next 10 years, which would require Republicans to reduce the tax cuts by an amount equal to the shortfall.
What is Trump’s plan for ending taxes on tips?
Trump first proposed ending taxes on tips on the campaign trail in Nevada, which has the highest concentration of tipped workers in the nation.
He reiterated that pledge in late January during a visit to Las Vegas, saying he’d work with Congress in the ensuing weeks to get a bill on his desk.
“If you’re a restaurant worker, a server, a valet, a bellhop, a bartender, or one of my caddies … or any other worker who relies on tipped income, your tips will be 100% yours,” Trump said.
How will no taxes on tips work?
The idea could be rolled out various ways. For example, no taxes on tips could focus only on federal income taxes, or also exempt payroll taxes. There could also be limits to certain industries or workers.
There have been a number of bills proposed that would eliminate or pare back taxes on tips, including:
Are there downsides to no taxes on tips?
Ending taxes on tips has bipartisan support from politicians, voters, industry trade groups and Nevada’s largest labor union, but tax policy experts have warned that there could be consequences, as previously reported by USA TODAY.
There are concerns no taxes on tips could exacerbate Americans’ tipping fatigue or increase the federal budget deficit, with various estimates saying the plan would reduce revenue by more than $100 billion over the next decade.
Meanwhile, critics have pointed out that a small percentage of low-income Americans would benefit from such a bill, with Yale University’s Budget Lab finding roughly 4 million people, or 2.5% of U.S. workers, were tipped in 2023.
More than one-third of tipped workers didn’t make enough money in 2022 to pay federal income taxes to begin with, according to the Budget Lab. Of the roughly 3% of families that would benefit from a tax deduction for tips, the average tax cut would be roughly $1,700, with the bottom fifth of earners saving $200.
