VP Harris Votes to Allow IRS to Tax Workers' Tips

Vice President Kamala Harris recently echoed a campaign promise made by former President Donald Trump to eliminate taxes on tips, despite her previous support for legislation that enabled the IRS to monitor and tax these earnings. On August 7, 2022, Harris cast a tie-breaking vote for the Inflation Reduction Act, which allocated $80 billion to the IRS for enhanced enforcement, particularly targeting the service industry’s tip reporting practices. This act has drawn criticism as it appears to contradict her current stance on tax relief for service workers. In February 2023, the IRS introduced the Service Industry Tip Compliance Agreement (SITCA) program, aimed at improving tip reporting compliance among employers in the service sector. The program involves monitoring actual tip revenue and charge data from point-of-sale systems, raising concerns about the IRS's focus on tracking tips from lower-income workers rather than solely targeting high earners as initially promised. Critics argue that this initiative contradicts the administration's assurances that the new IRS agents would primarily focus on wealthy individuals. Commentators, including Fox News's Sean Hannity, have voiced their discontent, suggesting that the IRS's actions reflect a broader trend of overreach into the earnings of everyday workers. The White House had previously promoted the Inflation Reduction Act as a means to ensure fairness in the tax code by targeting tax evasion among the wealthy, but the implementation of the SITCA program has led to fears that it will disproportionately affect those earning less. As the IRS moves forward with its plans, the debate continues over the implications of increased scrutiny on service workers' tips and the potential consequences of such policies on the broader economy.