“No Council Tax” may have limited benefits for CA workers

From LevagsCalmness

This story was originally published by CalmattersS Register about their ballots.

No tax on the advice, the promise of President Donald Trump’s campaign, is now part of the US Tax Code, but political spectrum experts see limited benefits for California workers.

The Ministry of Finance and IRS, at the end of last month, released details about their proposed provisions on the new tax deduction, which the Republicans included in their cost bill.

According to the provision, taxpayers who make less than $ 150,000 a year, or $ 300,000, if they submit together, could deduct up to $ 25,000 tips from their federal income taxes, whether they determine their deduction. Almost 70 professions that qualify are servers for restaurants, workers, barber concerts, cosmetologists and golf Caddy. Deduction is effective, starting this tax year and continues in 2028. The public can Send comments to IRS until October 22.

Workers and experts who spoke to Calmatters about any advice tax have had more questions than answers, as the results of income tax can vary significantly depending on the circumstances of the people. Are they unmarried, married individually or married to submit jointly? Do they have children? Do they deduct mileage or other costs? Experts also said the provision creates justice questions: some low -wage workers will receive deductions that workers with comparable salaries in other industries will not receive.

“It will be difficult for me to think of a more stupid tax policy that has become a law,” says Brian Gale, a law professor at UC Berkeley, whose focus includes taxes.

Gale said the provision made taxes even more complicated. He also said that this could cause some employers to reduce the pay of workers “with the full amount of tax savings.”

Meanwhile, they show polls Consumers are tired of bakshishSo they can stop doing so if they accept that all the workers at the top will already be able to deduct their advice, Gale and other experts said.

In addition, for some workers, deduction may not be sufficient to compensate for the negative effects of other aspects of the Republican cost bill.

“This is a little distraction from the general bill and how disproportionate it helps with rich people at the expense of low -income people,” says Kayla Kitson, a senior associate at the California Center for Budget and Politics, the brain trust to the left. “Many low -income workers are likely to be damaged by healthcare and healthcare cuts nutrition And the failure to extend the improved tax loans for premiums. “

What do workers think

Dale Randell, a self -occupied barber in Fairfield, a suburb of the Bay area, thinks he could take advantage of the new deduction. But he does not know how many advice he will actually get.

“It’s kind of difficult because everyone doesn’t advise,” he said. “It hits or misses, no sequence. I can go a whole week without anyone giving me advice.”

Also, the business has been slow since the beginning of the pandemic five years ago, as many new barbers have been redirecting the market since then, he said. State data confirm that: barber licenses issued during this fiscal year amount to 42 958, which is a 33% increase over the fiscal 2019-20 year. The business has been particularly bad in the last few months, Randell said.

“The benefit of this (deduction) will depend on how good the business is,” he said. “The business is slow, so I can’t count on something that is not there.”

This is in accordance with a Yale Budget Laboratory Analysis The fact that no advice is taxed may not be beneficial for more than one -third of the workers who are inclined, as they do not make enough to owe income tax first.

Elsewhere in the area of ​​Bay, Chris Brown said he was making about $ 95,000 to $ 100,000 a year from being a server in two different restaurants in Alamed. She said she would probably have to hire a tax preparation to see if she could take advantage of the new deduction, but she was skeptical because she doesn’t believe the Trump administration is looking at the working class.

“I still live pretty bad with the economy,” Brown said. “I can’t even allow myself to pay what I owe (in taxes) now.” She said keeping in tax advice “Sounds good, but I feel like she will bite us in the end.”

Only tips that are voluntarily given by customers will take into account deduction. This means that restaurant servers will not be able to deduct service fees that some restaurants are automatically applied to dinner checks.

Relying on food workers in California varies. In September, 27% of the bartenders’ income came from advice, according to Square for paying processing that analyzes wage data by more than 100,000 employees. Full service workers’ advice accounts for about 17% of their income last month, just like workers in the cafe. For workers at a fast service restaurants where there is no table service, the tips were about 11% of their income.

Trump said He received the idea of ​​no tax on a restaurant server in Nevada restaurant, which complained of taxes he had to pay on advice. The Union, which represents food workers and hospitality in Las Vegas, most supports the new deduction, although there are some complaints about the details.

As for the workers of the concert, they can see the uneven benefits of the new deduction, said Sergio Avedian, a driver of a Los Angeles driving and an associate at Gig-Work Blog Rideshare Guy.

“For drivers who often rely on low -cost tips, this can be felt as an immediate promotion,” Avedian said. But he added that the new deduction may not benefit drivers a lot because he thinks that only 15% to 20% of the Uber and Lyft Riders advice. He said deducting can be more useful for food delivery drivers, such as those who supply for Doordash, while probably won’t help Amazon Flex workers who usually do not receive advice.

More than 53% of the revenue of food delivery drivers is from tips, according to 2024 data from Gridwise Analytics, which is based on information from more than 260,000 drivers. The tips account for only about 10% of the drivers pay, while for couriers who deliver packages, this number is less than 4%.

Avedian also said that the workers at concerts have to pay independent employment tax, so this can be manifested in any benefit of the new deduction of the council-if the workers qualify for it, depending on their income.

Almost 40% of fees and ride drivers nationwide are on Medicaid or receive health subsidies as per American Progress CenterLev obsessed with a cerebral trust. In California, these drivers may be among More than 1 million people are expected to lose Medi-Cal Coverage on new working hours requirements in the Republican Costs Bill.

Justice and other problems

The uneven effect of deduction will be applied to other industries as per analyzes of Cato Institutelibertarian cerebral trust and US Action ForumRight cerebral trust. Both thought tanks criticized no tax on the councils during the 2024 presidential election when Trump and former Vice President Kamala Harris offered him. They said that there was no “other redemptive quality” and that only some workers with low salaries would receive a tax deduction.

Another way that deduction is unfair is that there is a marriage punishment, said Andrew Gradman, a tax lawyer in Los Angeles County.

“If two workers are married, they can only want $ 25,000, while one person would ask for $ 25,000,” he said.

Another possible problem: since the new deduction introduces even more complexity of tax legislation, some workers risk committing tax fraud or being charged with, Grman said.

If someone works for an institutional employer, “they will have accountants who will make a heavy raising,” he said, and this can help taxpayers know if they are eligible for deduction. “If you get your salary from Patreon or whatever it will be burdensome.”

This article was Originally Published on CalMatters and was reissued under Creative Commons Attribution-Noncommercial-Noderivatives License.