Madison, WI – Representative Cody Horlacher (R-Mukwonago) and Senator André Jacque (RDePere) introduced legislation relating to an income tax exemption for cash tips paid to an employee.
Currently in Wisconsin, tipped employees make up the majority of the workforce in various service industries throughout the state. Many of these employees are high school students, young adults working their way through college, and parents from single-income homes. Under this bill, cash tips received by an employee would be exempt from state income tax. This would represent a great benefit to hard working folks across Wisconsin’s robust tourism, restaurant, and tavern industries while providing businesses that use a tip structure a hiring incentive to recruit employees on the basis that they get to keep more of their own hard earned money.
I’m all for reducing taxes where we can, but this seems nonsensical. That’s legitimate income… the majority of some folks’ income… why should it be exempt? If I convince my employer to pay me in cash, can I be exempt?
Although I’ve always been a generous tipper, I’ve never received tips as income. I’ve never really thought it through, but I’ve always assumed that those tips were generally pocketed as unreported income. Other than self-reporting tip income is there any other way of legitimately tracking it?
Restaurants are required to report tip income to Fed and State authorities; usually this is done by estimating tips based on some ‘sanctioned’ formula. It’s not 100% accurate, but it is what it is.
Horlacher is a bit of a nut job. I cannot understand how Jacque got together with him for this wacko scheme–but I’d be willing to bet that this proposal is being advanced because the chilluns of many, many, leggies are at the “waitress” age.
Why don’t we just wipe out the income tax for all?