Speaker 1: Let's say good morning now to the host of How
Speaker 1: to Money on KFI every Sunday.
Speaker 2: It's Joel Larsgard.
Speaker 3: Morning, Joel, Morning Amy. Uh.
Speaker 1: We have been talking about the Big Beautiful Bill that
Speaker 1: includes no taxes on tips, and so we wanted to
Speaker 1: dig into that a little bit and find out one
Speaker 1: if you think that's a good idea, and then talk
Speaker 1: about tipping in general, because it's really well, it ticks
Speaker 1: me off.
Speaker 3: Yeah, the Big Beautiful Bill, there's still like, you know,
Speaker 3: how's it going to shake out, And there's a lot
Speaker 3: of stuff in it to kind of parse through, and
Speaker 3: it's going to impact all of our personal finances based
Speaker 3: on you know, how things actually shake out in the end.
Speaker 3: And the no tax on tips is one of the
Speaker 3: most interesting things to me. And it was a proposal
Speaker 3: that seemed like it was kind of by the seat
Speaker 3: of the pants, you know, spur of the moment sort
Speaker 3: of thought from President Trump on the when he was campaigning.
Speaker 3: And then you remember, if if you remember correctly, the
Speaker 3: Kamala Harris campaign. Yeah, they're like, yeah, we think it
Speaker 3: is a great idea too, and so it's like a
Speaker 3: political as a political tool, it makes sense, right, You're
Speaker 3: catering to a certain voter class. As a actual policy
Speaker 3: being implemented, I think there's a whole bunch of opportunity
Speaker 3: to really like swing and miss, and so I don't
Speaker 3: love the idea of saying, hey, this is a particular
Speaker 3: way you earn your income, and because of that, we're
Speaker 3: going to we're not going to make you pay taxes
Speaker 3: on this particular kind of income. Same think about somebody
Speaker 3: who's like a landscaper or something like that, and maybe
Speaker 3: they earn a similar amount of money per hour, but
Speaker 3: their income is going to be taxed at regular ordinary
Speaker 3: income tax rates, unlike somebody who's let's say, working in
Speaker 3: the service industry. And so I think it will incentivize
Speaker 3: people to consider different jobs. And I think it will
Speaker 3: also incentivize different businesses to maybe pay their employees less
Speaker 3: and try to rely on tips more and talk about, hey,
Speaker 3: this is actually going to help your tax bill in
Speaker 3: the end. It's also interesting because a lot of the
Speaker 3: people in some of these industries who rely on tips
Speaker 3: in a lot of ways, well, they're not paying much
Speaker 3: in taxes on those tips anyway. So I get because.
Speaker 2: Because they're cash, so they're not claiming them all.
Speaker 3: Well that and also because they don't make enough money
Speaker 3: maybe over the standard deduction to say that there's a
Speaker 3: meaningful tax levied against the income that they're making from tips.
Speaker 3: And of course cash tips are supposed to be reported
Speaker 3: to the IRS, but we all know that doesn't happen
Speaker 3: all the time.
Speaker 1: And then with the servers, they're traditionally not paid very well,
Speaker 1: like have really low base salaries, right, they rely on
Speaker 1: the tips, whereas a gardener may have a higher hourly
Speaker 1: rate but not get the tips.
Speaker 3: Right. But the thing is, at the end of the day,
Speaker 3: their income could be roughly the same and one person
Speaker 3: pays less tax because of just the classification of their income.
Speaker 3: The other thing I think this is going to do,
Speaker 3: and we've seen you alluded to this at the very beginning.
Speaker 3: People are already kind of frustrated with tipping culture in
Speaker 3: the United States. And I'm not I'm not like a
Speaker 3: Europhile or anything like that. I don't want I don't
Speaker 3: want to necessarily turn into Europe. But that's one of
Speaker 3: my favorite things about about Europe is that the servers
Speaker 3: and workers in restaurants and they get paid just a
Speaker 3: regular wags that they agree to work for and then
Speaker 3: tips are off the table. And I like that just
Speaker 3: as a as a consumer, as a customer, and I
Speaker 3: think more, this is actually going to incentivize tipping culture
Speaker 3: to go off the rails even more, and so I
Speaker 3: think there's just a hole. It reminds me of even
Speaker 3: just with the tariffs, And I'm saying, well, with tariffs,
Speaker 3: this is going to incentivize, like on the hardware and
Speaker 3: on the goods, you're going to pay a tariff on
Speaker 3: that stuff. Well, what if instead companies can get you
Speaker 3: to pay a subscription and charge you less for the
Speaker 3: actual device ahead of time, and so we're already in
Speaker 3: this amped up subscription economy. Well, tariffs are going to
Speaker 3: increase that the same thing is true I think of
Speaker 3: no taxes on tips. If this goes through in the
Speaker 3: final big beautiful Bill as it's being called, then it's
Speaker 3: only going to incentivize tipping culture to tilt heavier in
Speaker 3: that direction, and we as consumers are going to be
Speaker 3: even more frustrated. Well, when are we supposed to tip?
Speaker 3: How do we know? And is the company like pulling
Speaker 3: a fast one on me, increasing like you know, higher
Speaker 3: suggested tip amounts and I'm actually paying less for the good.
Speaker 3: Because I'm tipping more, it's going to just make things
Speaker 3: even more difficult I think for consumers to parse.
Speaker 1: And I will tell you in Europe it is frustrating
Speaker 1: because Americans are used to tipping and they're like, yeah,
Speaker 1: you don't have to, but there is sort of this
Speaker 1: should we and there when we were googling it because
Speaker 1: we were just over in Paris in London and they
Speaker 1: were like, well, if you want to tip, you know,
Speaker 1: like a pound or two in London is good. We're like,
Speaker 1: on how much of a bill you know, Like you
Speaker 1: really don't know. It's very It's turned into a very
Speaker 1: ambiguous thing, even though tipping isn't necessarily expected, whereas here
Speaker 1: it's absolutely expected. And I think that the tipping rate
Speaker 1: is getting a little out of control.
Speaker 2: Well I was.
Speaker 3: I was ordering a pizza the other night and I
Speaker 3: ordered it and I was going to go pick it up,
Speaker 3: no delivery or anything, and there was a suggested twenty
Speaker 3: or twenty five percent tip, and I'm like, this was
Speaker 3: not what it used to be. Like like when I'm
Speaker 3: more than okay to tip my server twenty twenty five
Speaker 3: percent when I'm going on to eat and they're waiting
Speaker 3: when you get service, right, but then when you order
Speaker 3: it the counter and then you come pick up your stuff,
Speaker 3: or you order something and you go pick it up yourself.
Speaker 3: The fact that there are these really high suggestive tips,
Speaker 3: this is just this just blurs the lines even more.
Speaker 3: And I think you as a consumer, as an individual,
Speaker 3: need to have an idea of what you're willing to
Speaker 3: tip and what you're willing to tip. For if I
Speaker 3: go out and get a coffee and they handcraft it
Speaker 3: for me, I'm willing to tip a buck or a
Speaker 3: beer saying like that. But you just have to kind
Speaker 3: of know ahead of time, Hey, how much am I
Speaker 3: going to tip on this pizza where I'm paying a
Speaker 3: lot for the pizza and then I'm not necessarily tipping
Speaker 3: someone they're not serving me. So do I tip? How much?
Speaker 2: Do I tip?
Speaker 3: And I think you have to have an idea ahead
Speaker 3: of time what you're willing to tip so you don't
Speaker 3: feel guilted into tipping more than you expected in the moment.
Speaker 2: And that's the thing that really ticks me off about it.
Speaker 1: I don't know how you feel about it, but that
Speaker 1: they they show you the screen and they know that
Speaker 1: it's a tipping screen. And if you go to custom
Speaker 1: and do a zero and even some of them go
Speaker 1: and here's the place to leave a tip, I'm like,
Speaker 1: how dare you say that to me?
Speaker 2: I mean, it's just infuriating.
Speaker 3: It's the world doesn't.
Speaker 1: Do anything for me at all, except like, well, like
Speaker 1: a Dodger statium, and I love Dodger Statium. But when
Speaker 1: they open a beer can for me and then they say, here,
Speaker 1: do you want to do an eighteen percent tip.
Speaker 3: I'm like, no, right on the on the fourteen dollars beer,
Speaker 3: now eighteen dollar beer? Oh hateen? Yeah, sorry, I underestimated.
Speaker 2: Don't get me started, Joel Larsguard. We ran out of time.
Speaker 1: We didn't get to talk about renting instead of buying
Speaker 1: for millionaires. Maybe we can hold that till next week.
Speaker 1: That sounds good, all right, Joel Larsguard. You can hear
Speaker 1: him every Sunday noon to two right here on KFI.
Speaker 1: The show is called how to Money, and you can
Speaker 1: follow him for great financial advice at how to Money.
Speaker 2: Joel. Thanks Joel.
Speaker 3: Thanks Amy