General Discussion
In reply to the discussion: I'm tired of the Uber military worship [View all]Ms. Toad
(34,182 posts)Employers report tips on W-2 forms - either actual tips reported to them by their employees, or a presumptive amount.
As a former enrolled agent, I can count on less than one finger the number of employers whose W-2 forms reported anything other than the presumptive amount.
Partly that is becuase those earning more than minimum wage don't want to pay taxes on the excess - so they don't report thier tip income to their employers. That reporting mechanism is the same one that is used to top off the wages of employees who make less than minimum wage.
The system is broken - it encourages employees to not report their income (since most are living paycheck-to-paycheck anyway), and it gives employers cheap labor with little risk that they will be required to pay more than minimum wage. It creates a de facto obligation for any progressive/social justice minded person to tip. It leaves many even more impoverished than they would otherwise be at retirment - becasue your social security income is based on your wage income (which is artificially low if all of your tip income was not reported).
We need to scrap it and go to a living wage for all system, with slightly higher prices on the menu.
My hope is that tips would altogether disappear - but even if they don't, there is not impoverishing impact for not tipping for poor service that exists now.