It was a rare moment of unity for Republican presidential nominee Donald Trump and his Democratic rival, Vice President Kamala Harris. Trump proposed eliminating taxes on tips for underpaid service workers, and shortly after, Harris adopted the policy as part of her campaign. 

California Republicans, sure of a no-brainer win for struggling working-class Americans, suggested ending taxes on tips in their state. 

But the California GOP underestimated how little Democrats care about their state’s residents’ struggles. Most of California’s Democrats voted to reject the amendment, except for Senate President Pro Tempore Mike McGuire and State Sen. Nancy Skinner, who didn’t vote. All nine Republicans supported it.  

According to Yale University’s Budget Lab, about 4 million workers rely on tips, making up 2.5% of all workers in the U.S. Many earn less than the minimum wage and get most of their income from tips.  

California recently fixed a $47 billion budget gap by making cuts, delaying expenses, and changing how money is used. It’s unclear what more the state would need to do to make up lost revenue if they decided to remove taxes on tips. 

Advisors at the federal level share this concern. The bipartisan Committee for Responsible Federal Budget says it could lower government revenue by about $15 to $25 billion annually. 

Both candidates are focusing on Nevada, a key state with many service workers that could decide the election. 

Although ending taxes on tips might seem appealing, tax experts criticize it. Steven Rosenthal from the Urban-Brookings Tax Policy Center says it’s a bad idea. He believes it fails the main tests for good tax policy: fairness, efficiency, and impact on revenue. He also questions why tipped workers should get special tax treatment compared to others doing similar jobs. 

Amy Monahan, a University of Minnesota Law School professor, points out that not all low-wage workers get tips. For example, people working in grocery stores or as personal care attendants don’t receive tips, so treating tipped workers differently could be unfair. 

Monahan also pointed out that the plan might not just help low-income workers. Well-paid employees, such as those in fancy salons or upscale restaurants, would benefit, too, since their tips would be untaxed. 

Critics warn that exempting tips from taxes could also harm the economy. While tipped workers are common in Nevada, they comprise only 2.5% of the nation’s workforce. This could lead many other workers, like those in home cleaning, dental hygiene, plumbing, auto repair, and even high-paying jobs like lawyers and investment bankers, to ask for untaxed tips, too. 

Harris’ campaign said she would work with Congress to create a plan that includes income limits and other rules to prevent wealthy people from turning their earnings into untaxed tips. This would prevent high-paid workers, like hedge fund managers and lawyers, from abusing the system. Trump hasn’t said if his plan would have similar rules. 

Tipped workers are usually younger, with an average age of 31, and earn less money. In 2023, the median weekly pay for tipped workers was $538, while non-tipped workers made about $1,000 per week. 

The plan to remove taxes on tips could be a problem if it means cutting payroll taxes, which help fund Social Security and Medicare. This could lead to lower Social Security benefits for tipped workers. 

The idea of not taxing tips isn’t new. Ron Paul suggested it during his 2012 presidential run but didn’t get much support. Rosenthal says it hasn’t become law because it’s seen as impractical. Both Republicans and Democrats would likely reject it. 

Monahan believes there are better ways to help low-income workers. For example, increasing the standard deduction could exempt more people from federal income taxes. Lowering tax rates for the lowest earners and expanding the Earned Income Tax Credit, which supports people with low-paying jobs, could also be more effective. 

Trump suggested the idea because he believes in helping struggling Americans. Harris embraced it because she knew it would appeal to the middle class, and she would never have to follow through on her promise.  

But California has spoken. It wants to keep taxing the underpaid to fund its bizarre and unchecked spending. 

Here’s a “tip” for California Republicans. Run away and don’t look back. California is beyond redemption.