Tips and Taxes
Oct 8th, 2009 | By Michael Hinckley | Read more in: Fearless History
Though it is not about history, per se, the idea of tipping has gotten a ludicrous amount of coverage lately — particularly as the economy continues to contract. I begin this with a confession: While in college and in graduate school, I worked as a waiter and a bar tender to support my family while attending school on a full-time basis. I mention this because one should always be honest about their viewpoint before launching into any kind of discussion. That being said, here’s where my primer on tips, taxes, and work begins.
Fuck you Liz Pulliam Weston. And I mean that from the bottom of my heart. You had me with the catchy title of your MSN Money article “The Rude New Tip-Jar Economy.” I also run into tip jars at the oddest places. Here in Cincinnati you can find tip jars in ice cream parlors, privately-owned coffee shops and even fast-food restaurants. I also feel like an ass if I don’t leave at least some change as a tip, but feel sheepish about being brow-beaten into tipping. But here’s where my “Fuck You Liz Pulliam Weston” comes in.
In your article (HERE) you state, regarding service charges for waiter’s tips on credit cards:
“Another advantage, in my view: There’s a paper trail for most of the server’s income. Cash tips encourage tax evasion, which isn’t fair to those of us who try to pay our fair shares.”
According to the Bureau of Labor Statistics, the average hourly income of a waiter, server, waitress, or other food service worker is — brace yourselves — $6.77 to $10.10 an hour. Having worked in food service, I can also attest to the fact that whether in Ohio, California, or other states, most servers are paid $2.12 per hour from their employer as a mere formality to cover the taxes servers are assessed. Currently servers are taxed based on their SALES that week, not their tips. In 1982, congress mandated that all servers, waiters, and tip-earning workers be assessed taxes at 8 percent of their total sales. In the intervening years, that amount of assessment has risen to about 12 percent meaning that for every $1 you spend at a restaurant, the GOVERNMENT assumes that the server will be tipped about $1.20.
So let’s do some quick math here, Liz Pulliam Weston (Fuck you). If a server works 40 hours a week (most actually work more, but I’ll get to that later) they earn $404 per week, for a grand total of $1,212 per month OR $21,008 per year. According to the Census Bureau, the poverty line for a family of 3 (which I had) is just under $18,000 a year as of 2008. This means that a high-middle earning server working 40 hours a week for 52 weeks earns barely $3,000 over the poverty line. This also means the vast majority of waiters earn BELOW the poverty line.
“What does this have to do with tax evasion?” you may ask, Liz Pulliam Weston (Fuck you). “The low earnings encourage under-reporting of tips and thus tax evasion!” Aha, here’s the problem with that. Living BELOW the poverty line or barely above it really amounts to a smattering of dollars — most of which the server gets back anyway when their taxes are done. Head of household, child tax credit, deductions, etc. all pretty much mean every dollar paid in taxes is returned to the workers. Therefore, there is very little incentive to evade taxes. Nevertheless, I assure you that the IRS is very vigilant about catching waiters who try to game the system, and there are some who earn much more than $10 an hour who report insanely low tips, but they are an infinitesimal minority.
But on to the work schedule of a 40 hour a week server. Sure, you finish up at your cubicle (or office — do you have an office, Liz Pulliam Weston [Fuck you]?) and you feel drained, tired to the bone. You think “aw, screw it, I’ll go to Friday’s or Outback or some other restaurant so I don’t have to cook.” Well, the server who meets you at the table — that chipper, mannered guy or girl — was probably at work before you went to lunch and will be at work — doing unpaid “side work” in the restaurant — well after you’re snug as a bug in bed. On top of that, if you don’t like the waiter, or you feel they slighted you, you may not short them, but others sure as hell do. People stiff waiters for all kinds of reason, from cheap-skatery to thoughtlessness. I once worked for a broker who drove a Corvette and bragged about his vacation house in Lake Havasu, Arizona, but refused to pay tips because he felt it wasn’t his job to pay the wages of someone else’s employees. Other people refuse to tip on alcoholic beverages, desserts, and appetizers for whatever reason. To make matters worse, many restaurants, hotels, and other eateries force waiters to “tip out” other members of the restaurant — bus boys, bartenders, Maitre d’ or other ancillary characters — thus reducing their tips EVEN FURTHER.
Even when people are NOT being evil, their good intentions fuck waiters up. Once, I worked a HUGE table all by myself — I gave away tables I might have worked otherwise because I was so busy — and was prompt with the food, charming, witty and helpful. The table cleared and I thought I’d hit the motherlode with a couple of $20 bills on the table. .. see it coming yet? Do you? The $20 bills were not, in fact, legal tender of these United States of America, nor of Canada, Mexico or Botswana. It was a religious flier disguised as a greenback. Inside was a message “Disappointed? You wouldn’t be if Jesus was your Savior. Join us at … ” and gave the address of a church I seriously considered committing a hate-crime against. An hour and a half of my time taken up, at least 8 percent (but more likely 12 percent) tax assessed on a $300 food-and-drink bill and I had “Jesus Saves!” to show for it. For some reason, the bank refused to accept my Savior deposit — go figure.
Waiters work typically 6 to 12 hour shifts — restaurants come up with this crazy “split schedule” scheme to get around having to give you a proper, sit-down lunch break, by the way. Servers are on their feet constantly, have to put up with being harassed, harangued, poked, prodded, carry heavy loads, clean up after your oh-so-cute brat who shredded the bread brought to your table, clean up your other messes, deal with your obnoxious body odor/perfume, and (in many states) work in the smoking section even if they’re a non-smoker, smile, be charming and courteous, AND have to act like its their fault if your Cajun-Grilled Tilapia was too spicy to eat even after they warned you it was REALLY spicy all in the hopes that you will leave 15 percent of your bill. On top of that, very few waiters can afford to pay for health care, have a meager leave policy (most restaurants and bars do not have paid leave) AND can be fired at the drop of a hat by a a manager who is intimidated by a customer who has had too much to drink.
Let us compare, though, other people who are tax dodgers who DO have paper trails: Martha Stewart accrued $220,000 in tax debt to the state of New York alone (the equivalent of all the earning of 10 waiters), Wesley Snipes owed $15 MILLION in taxes to the IRS (the equivalent combined wages of 714 waiters) AND the US government recently reached an agreement with Swiss banks to catch affluent Wall Streeters, CEOs and other wealthy individuals who had — for decades — been hiding their assets overseas to escape paying their “fair share.”
So, in closing, while I appreciate your ire about the rude tip-jars, you do yourself and others a disservice by perpetuating the myth that servers, waiters, bartenders and valets are tax evading bums who can’t get a real job. Until you’ve actually done the work that these people do — without the benefits many Americans take for granted — you need to shut up and stick to the facts.














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I love the (Fuck You) after her name every entry. Classic! Shysty b!tch. LeftOfCenter44.com
[Reply]
I have been a server for three and a half years, I worked my way through beauty school doing so. If I wasn’t a server at night I don’t know how I would have been able to support myself while going to school. The land of the free is quite expensive, especially for the working class/working class poor (whom most of the time have extreme difficulty becoming anything but). Its incredibly troubling to me how the service industry is viewed. Does she realize that most of us don’t even get to go have massages? haha.
Anyhow I just wanted to comment on this:
“People who in the past didn’t accept tips, such as hair salon owners, but who now seem to expect them.”
While I was in school I was taught not to expect a tip and be grateful for one if you got it. I cant speak for all hairdressers, but that is the way i was educated when i went to school 3 years ago.
So add a “fuck you” from me
[Reply]