The sudden popularity of exempting tips from taxes is a reminder of the improvisational nature of economic policymaking under Donald Trump.The New York Times reports that the recent surge in support for exempting tips from taxes serves as a reminder of the impromptu approach to economic policymaking under President Donald Trump. The idea was reportedly born during a dinner at Trump’s Las Vegas hotel, where a waitress complained about the burden of paying taxes on her tips. Trump quickly adopted the idea as a campaign pledge, declaring “No taxes on tips!” at a rally in Virginia.

Since then, the proposal has gained traction and has been officially embraced by the Republican Party in their platform. House Speaker Mike Johnson, a Republican from Louisiana, has also expressed his support and hopes to pass it soon. Even some Democrats, including the two senators representing Nevada, a state with a large service industry, have endorsed the idea.

The sudden popularity of this proposal highlights the improvisational nature of economic policymaking under Trump. Economists who advised the Trump campaign were not aware of the idea until Trump publicly announced it. However, Republicans now see it as a way to appeal to working-class Americans during the campaign against President Biden.

Trump has even encouraged his supporters to leave notes on restaurant tabs, telling service staff that a Trump victory in November means no taxes on tips. According to the Budget Lab at Yale, approximately four million Americans work in jobs where tips are common.

Stephen Moore, a Trump economic adviser, admitted that the idea was not developed by a group of economists, but rather as a political strategy. He stated, “I thought, ‘I don’t know if he’s being serious or not’, but as a political matter it’s a home run.” 

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