Let's say good morning now to the host of How to Money on KFI every Sunday.
It's Joel Larsgard.
Morning, Joel, Morning Amy. Uh.
We have been talking about the Big Beautiful Bill that includes no taxes on tips, and so we wanted to dig into that a little bit and find out one if you think that's a good idea, and then talk about tipping in general, because it's really well, it ticks me off.
Yeah, the Big Beautiful Bill, there's still like, you know, how's it going to shake out, And there's a lot of stuff in it to kind of parse through, and it's going to impact all of our personal finances based on you know, how things actually shake out in the end. And the no tax on tips is one of the
most interesting things to me. And it was a proposal that seemed like it was kind of by the seat of the pants, you know, spur of the moment sort of thought from President Trump on the when he was campaigning. And then you remember, if if you remember correctly, the Kamala Harris campaign. Yeah, they're like, yeah, we think it is a great idea too, and so it's like a political as a political tool, it makes sense, right, You're
catering to a certain voter class. As a actual policy being implemented, I think there's a whole bunch of opportunity to really like swing and miss, and so I don't love the idea of saying, hey, this is a particular way you earn your income, and because of that, we're going to we're not going to make you pay taxes
on this particular kind of income. Same think about somebody who's like a landscaper or something like that, and maybe they earn a similar amount of money per hour, but their income is going to be taxed at regular ordinary income tax rates, unlike somebody who's let's say, working in the service industry. And so I think it will incentivize
people to consider different jobs. And I think it will also incentivize different businesses to maybe pay their employees less and try to rely on tips more and talk about, hey, this is actually going to help your tax bill in the end. It's also interesting because a lot of the people in some of these industries who rely on tips in a lot of ways, well, they're not paying much in taxes on those tips anyway. So I get because.
Because they're cash, so they're not claiming them all.
Well that and also because they don't make enough money maybe over the standard deduction to say that there's a meaningful tax levied against the income that they're making from tips. And of course cash tips are supposed to be reported to the IRS, but we all know that doesn't happen all the time.
And then with the servers, they're traditionally not paid very well, like have really low base salaries, right, they rely on the tips, whereas a gardener may have a higher hourly rate but not get the tips.
Right. But the thing is, at the end of the day, their income could be roughly the same and one person pays less tax because of just the classification of their income. The other thing I think this is going to do, and we've seen you alluded to this at the very beginning. People are already kind of frustrated with tipping culture in the United States. And I'm not I'm not like a Europhile or anything like that. I don't want I don't
want to necessarily turn into Europe. But that's one of my favorite things about about Europe is that the servers and workers in restaurants and they get paid just a regular wags that they agree to work for and then tips are off the table. And I like that just as a as a consumer, as a customer, and I think more, this is actually going to incentivize tipping culture to go off the rails even more, and so I
think there's just a hole. It reminds me of even just with the tariffs, And I'm saying, well, with tariffs, this is going to incentivize, like on the hardware and on the goods, you're going to pay a tariff on that stuff. Well, what if instead companies can get you to pay a subscription and charge you less for the actual device ahead of time, and so we're already in this amped up subscription economy. Well, tariffs are going to increase that the same thing is true I think of
no taxes on tips. If this goes through in the final big beautiful Bill as it's being called, then it's only going to incentivize tipping culture to tilt heavier in that direction, and we as consumers are going to be even more frustrated. Well, when are we supposed to tip? How do we know? And is the company like pulling a fast one on me, increasing like you know, higher suggested tip amounts and I'm actually paying less for the good.
Because I'm tipping more, it's going to just make things even more difficult I think for consumers to parse.
And I will tell you in Europe it is frustrating because Americans are used to tipping and they're like, yeah, you don't have to, but there is sort of this should we and there when we were googling it because we were just over in Paris in London and they were like, well, if you want to tip, you know, like a pound or two in London is good. We're like, on how much of a bill you know, Like you
really don't know. It's very It's turned into a very ambiguous thing, even though tipping isn't necessarily expected, whereas here it's absolutely expected. And I think that the tipping rate is getting a little out of control.
Well I was.
I was ordering a pizza the other night and I ordered it and I was going to go pick it up, no delivery or anything, and there was a suggested twenty or twenty five percent tip, and I'm like, this was
not what it used to be. Like like when I'm more than okay to tip my server twenty twenty five percent when I'm going on to eat and they're waiting when you get service, right, but then when you order it the counter and then you come pick up your stuff, or you order something and you go pick it up yourself. The fact that there are these really high suggestive tips, this is just this just blurs the lines even more.
And I think you as a consumer, as an individual, need to have an idea of what you're willing to tip and what you're willing to tip. For if I go out and get a coffee and they handcraft it for me, I'm willing to tip a buck or a beer saying like that. But you just have to kind of know ahead of time, Hey, how much am I going to tip on this pizza where I'm paying a lot for the pizza and then I'm not necessarily tipping someone they're not serving me. So do I tip? How much?
Do I tip?
And I think you have to have an idea ahead of time what you're willing to tip so you don't feel guilted into tipping more than you expected in the moment.
And that's the thing that really ticks me off about it.
I don't know how you feel about it, but that they they show you the screen and they know that it's a tipping screen. And if you go to custom and do a zero and even some of them go and here's the place to leave a tip, I'm like, how dare you say that to me?
I mean, it's just infuriating.
It's the world doesn't.
Do anything for me at all, except like, well, like a Dodger statium, and I love Dodger Statium. But when they open a beer can for me and then they say, here, do you want to do an eighteen percent tip.
I'm like, no, right on the on the fourteen dollars beer, now eighteen dollar beer? Oh hateen? Yeah, sorry, I underestimated.
Don't get me started, Joel Larsguard. We ran out of time.
We didn't get to talk about renting instead of buying for millionaires. Maybe we can hold that till next week. That sounds good, all right, Joel Larsguard. You can hear him every Sunday noon to two right here on KFI. The show is called how to Money, and you can follow him for great financial advice at how to Money.
Joel. Thanks Joel.
Thanks Amy