Trump's pledge to end taxes on tips could help Massachusetts economy, expert says
BOSTON - President Trump's campaign pledge to eliminate federal income taxes on tips appears to be gaining traction. It could be a big boost for low-paid restaurant workers and others in the service industry who depend on that tip income.
Matthew Pasquale has worked in kitchens running food, bussing tables and slinging pizzas in Boston since he was 16.
"It would be great for the guys that they don't have to worry about that when tax season comes," Pasquale told WBZ-TV at Halftime Pizza Monday.
No taxes on tips
While the move could lower tax revenue for the federal government, it wouldn't for Massachusetts. According to one economist, the change would keep more money in consumers' pockets to spend locally.
"Workers who do get the tax break are going to spend more. That will generate tax revenue for us through the sales tax," said Boston College economics Professor Peter Ireland. "Restaurant workers were particularly hard hit in 2020 and maybe this is a way of making it up to them."
Non-tipped workers
While Professor Ireland says he understands the logic behind the tax cut proposal, there may be a more equitable way for both tipped workers at the front of the house and non-tipped line cooks or chefs to benefit.
"Why not just offer a tax break to all workers below a certain income threshold?" Professor Ireland asked.
Career restaurant worker Jamie Mainwaring says the idea has potential but change in the hospitality industry takes time and it's unclear if the plan would work.
"There is no guarantee that anything like that is going to be for the better," said Mainwaring.
WBZ contacted the governor's office to ask if Massachusetts would consider this, but we did not hear back.
