Why Trump and Harris are pandering to Nevada tippers

Some groups of voters are particularly at the center of the campaign: union members, urban minorities, young idealists. This year, Nevada’s hospitality workers are the surprising target of bipartisan political pandering.

Both Republican Donald Trump and Democrat Kamala Harris want to eliminate the federal tax on tips earned by waiters, bartenders, drivers and caddies. This would only affect about 2% of all workers, so the idea is not exactly met with widespread support.

But Nevada. The Tax Policy Center recently analyzed labor market data and pointed out that Nevada has by far the highest percentage of workers who receive tips: 5.5% of the labor force, nearly three times the national average. This is obviously due to the gambling and entertainment center of Las Vegas, as well as Reno and the Lake Tahoe area.

Nevada is also one of seven swing states that are likely to decide this year’s presidential duel between Harris and Trump. There are only six electoral votes, but that could be decisive in what is likely to be a very close race that will be decided by a small number of voters in these seven swing states.

If Harris and Trump win all the votes they are likely to receive, that leaves seven undecided elections that are currently too close to predict. If Harris wins Pennsylvania, Michigan, Wisconsin and Arizona while Trump wins North Carolina and Georgia, that would leave Harris with 267 electoral votes and Trump with 264. Whoever wins Nevada and its 6 votes would become the next president. In other ways, any of these seven swing states could become the deciding candidate.

It’s cynical and clever to offer a tax break for Nevada hospitality workers, something the Trump campaign was the first to discover. There are about 350,000 hospitality workers in Nevada, many of whom earn their income through tips. Joe Biden won Nevada by less than 34,000 votes in 2020. If Trump could win the votes of more tipped workers, it could help him win the state.

Harris apparently thought it was risky enough to copy Trump’s idea – which she announced at a rally in Nevada on August 11. While she doesn’t get credit for coming up with the idea, she may have negated any advantage it might have brought to Trump.

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Every voter would say yes if they were offered a tax cut. Actually implementing it is another matter entirely. Only Congress can change the tax code through legislation. If Congress passed tax cuts for everyone who wants them, there would be no government revenue to fund the services, benefits, and infrastructure that people want. And no matter how much tippers think they deserve it and maybe do, eliminating the tip tax is a terrible idea politically.

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In Nevada, tipped workers fare relatively well. The minimum wage for tipped workers is $12, the fifth highest in the country after Washington, California, Oregon, and Hawaii. At the other end of the scale, the minimum wage for tipped workers (which is different from the minimum wage for non-tipped workers) is a paltry $2.13 in 16 states.

If the goal were to help low-income workers in general, you would never single out those who earn tips, since they make up only a small portion of the workforce. What you could do instead is raise the federal minimum wage, which has been stuck at $7.25 since 2009 and has been severely eroded by inflation. As part of that, you could raise the minimum wage for workers who receive tips from the insulting $2.13.

Harris and Trump both claim they have different plans to help low-income earners. Harris wants new tax breaks for working parents and guaranteed benefits like paid leave. Trump says his plans to maximize fossil fuel production and make companies more profitable will drive down prices and help low-income earners the most. It’s almost as if they don’t need to specifically penalize tipped workers at all.

Except for winning Nevada.

Rick Newman is senior columnist for Yahoo FinanceFollow him on X at @rickjnewman.

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