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economic policy institute
Senate-Passed No Tax on Tips Bill a 'Distraction From the Real Fight'
"We cannot tax-break our way out of an economy that continues to pay people less than it costs to live," said the group One Fair Wage.
May 21, 2025
After the U.S. Senate on Wednesday unexpectedly passed a bill that would exempt some tips from federal income tax, one labor group that campaigns for raising wages warned that while the bill would offer moderate relief to some Americans, it does not address the poverty wages facing many in the service sector—a message the group has hit on in the past.
"For all the bipartisan celebration, this bill is a distraction from the real fight," said Saru Jayaraman, president of One Fair Wage, in a statement on Wednesday. "If Democrats want to offer a true alternative, they need to say it loud and clear: it's time to raise the minimum wage and end the subminimum wage once and for all."
The bill passed by the Senate on Wednesday, the No Tax on Tips Act, would establish a new federal tax deduction of up to $25,000 for cash tips reported to employers by employees for the purposes of withholding payroll taxes. Qualified cash tips include "any cash tip received by an individual in the course of such individual's employment in an occupation which traditionally and customarily received tips on or before December 31, 2023," according to the bill text. Employees who made more than $160,000 in the prior tax year are not able to claim the deduction.
Currently, for tax purposes, tips are treated the same as regular wages. The bill was cosponsored by a bipartisan group of lawmakers and was passed by unanimous vote. It will now go to the House.
The idea of getting rid of federal taxes on tipped wages was touted by U.S. President Trump on the campaign trail and then-presidential candidate Vice President Kamala Harris also embraced the idea.
An analysis published last year by Yale's Budget Lab found that a "meaningful share" of tipped workers already pay nothing in federal income tax and that tipped work is a very small slice of the labor market.
Less than 4% of workers in the bottom half of hourly wage jobs, people making below $25 an hour in 2023, are in tipped jobs. Thirty seven percent of tipped workers in 2022 made so little that they paid zero in federal income tax before factoring in credits, according to Yale's analysis, and for non-tipped occupations, the equivalent share was much smaller—only 16%.
A report from One Fair Wage released last summer found that the annual income of tipped restaurant workers was so low that 46% of them do not earn enough to pay income taxes based on their individual income.
According to analysis from the Economic Policy Institute (EPI), in addition to helping relatively few workers, exempting taxes on tips could potentially undercut pay for many more workers, would encourage tax avoidance, and would reduce pressure on employers to increase base pay, among other concerns.
According to One Fair Wage, the true relief from the country's affordability crisis will come through raising wages, not through "tax gimmicks."
"We cannot tax-break our way out of an economy that continues to pay people less than it costs to live," the group added.
EPI also calls ending taxation on tips "a distraction from proven methods for supporting low-wage workers, like raising the minimum wage and eliminating the subminimum wage for tipped workers."
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Trump-GOP Tax Bill a Gift to 'Predatory Landlords' That Will Worsen Already Dire Housing Crisis
"Housing programs are among the important public services being targeted for significant cuts to fund tax giveaways for billionaires and their wealthy donors," warned one group.
May 15, 2025
House Republicans' proposed budget reconciliation package will make mortgages expensive and harder to obtain, a progressive tax policy group warned Thursday, while over 30 advocacy groups sounded the alarm over the Trump administration's gutting of federal agencies and programs, moves that are exacerbating the U.S. housing crisis.
Americans for Tax Fairness (ATF) said that the proposed permanent extension of expiring portions of the Tax Cuts and Jobs Act (TCJA) signed into law by President Donald Trump during his first term would grant massive tax breaks to big corporations and the ultrawealthy, "wasting trillions of dollars that could help solve our country's affordable housing crisis."
"The deficit-financed tax cuts would also increase interest rates, making housing less affordable," ATF added. "To the extent the tax cuts are not added to the deficit, housing programs are among the important public services being targeted for significant cuts to fund tax giveaways for billionaires and their wealthy donors."
"They are paving the way for more predatory landlords to jack up rent."
ATF's assertion is supported by a report published in February by the Economic Policy Institute finding that "large, deficit-financed tax cuts would put upward pressure on inflation and interest rates, slowing growth and causing pain to households," including by making borrowing for a home more expensive.
ATF noted that extending the TCJA's weakened low-income housing tax credit (LIHTC) could result in 235,000 fewer affordable housing units over 10 years.
"Trump's tax scam reduced the financial incentive for corporations—the largest LIHTC investors—to make equity investments in the tax credits by slashing the corporate tax rate to 21%, and adopting a stingier measure of inflation," the group said.
"One of the most regressive provisions in the 2017 Trump-GOP tax law is the so-called 'opportunity zone' tax break," ATF contended. "While proponents claimed it would encourage investment in low-income neighborhoods, it has instead been ruthlessly exploited by wealthy real estate investors."
"In fact, this program has failed to deliver the promised economic opportunity to underserved communities, instead turning many of these neighborhoods into what can more accurately be described as exploitation zones," the group added.
The Lever's Luke Goldstein and Katya Schwenk reported Tuesday that the reconciliation package's proposed restrictions on state governments passing new regulations on artificial intelligence technology "could kill crackdowns on real estate management company RealPage for raising rents and contributing to the country's housing crisis."
RealPage is accused of price gouging renters via AI-powered surveillance pricing and automated insurance denials and management systems.
"Not only are House Republicans giving their billionaire donors and large corporations a massive tax handout, they are giving RealPage and bad actors like them a free pass to rip off working families," Lindsay Owens, executive director of the economic justice group Groundwork Collaborative, said Wednesday.
"They are paving the way for more predatory landlords to jack up rent, more apps to drive down gig worker wages, and more retailers to hike prices on consumers," Owens added. "The GOP tax bill tells you everything you need to know about the Republican Party's priorities and how unserious they are about lowering costs for working families."
More than a dozen states have joined a class action lawsuit accusing RealPage of using AI to artificially inflate housing prices across the nation.
Also on Thursday, more than 30 housing, consumer, and civil rights groups warned that the Trump administration's deep cuts to federal agencies and programs—spearheaded by the so-called Department of Government Efficiency—"are worsening the nation's housing crisis."
"Our families, neighbors, and communities deserve better than these untenable and unconscionable proposals."
"The Trump administration promised to address the high cost of housing, but so far has proposed policies that will increase the cost of rent, shred the nation's housing safety net, and push more people into homelessness," National Low Income Housing Coalition interim president and CEO Renee Willis said in a statement.
"At a time when more people than ever are struggling to afford the cost of rent and a record number of people are experiencing homelessness, rolling back fair housing protections and cutting funding for rental assistance, homelessness services, and affordable housing development—and gutting the workforce responsible for administering these programs—will only create more hardship," Willis added. "Our families, neighbors, and communities deserve better than these untenable and unconscionable proposals."
In a wider critique of Trump's policy proposals, U.S. Sen. Bernie Sanders (I-Vt.) said Thursday on social media: "Wages are stagnant. Housing costs are soaring."
"Many young people will never be able to afford their own homes, but Trump wants to increase the bloated military budget by $150 billion," Sanders added. "WRONG. That money should go toward building the affordable housing that we desperately need."
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Trump Assault on Federal Contractor Wages Could Mean 25% Pay Cuts for Hundreds of Thousands
"A higher federal contractor wage standard is good for employers and the federal government overall," said one left-leaning think tank.
Apr 11, 2025
After U.S. President Donald Trump last month undid a Biden-era regulation that required businesses that contract with the federal government to pay their workers a $17.75 an hour minimum wage, the Center for American Progress released an analysis Friday which found that some workers impacted by the change could see a 25% pay cut.
Thanks to rollback from Trump, "corporations working on government contracts are free to cut wages for hundreds of thousands of workers," according to the author of the analysis, who also said that the move constitutes a new front in the Trump administration's "war on workers."
Former President Joe Biden's order, which was announced in 2021 and went into effect in 2022, initially raised the minimum wage to $15 an hour with automatic updates, which bumped it the minimum up to $17.75 in January 2025.
The rescission was part of an executive order that reversed 18 "harmful executive orders and actions" issued by Biden.
According to CAP, a liberal think tank, Trump's scrapping of the Biden minimum wage protection leaves in place an Obama-era rule, meaning some workers on federal contracts can now be paid a minimum of $13.30 an hour.
The analysis arrived at the 25% pay cut by calculating the difference between the $17.75 floor and $13.30. However, CAP noted that the U.S. Department of Labor still has to issue guidance over how it will enforce this older wage standard.
Other wage protections for workers on federal contracts exist, but CAP argues that "they are inadequate for protecting the workers who just saw their minimum wage taken away."
The Davis-Bacon Act establishes minimum prevailing wage standards for workers on federal construction sites, for example, but the wages established under the law can be much lower than $17.75 an hour, according to the analysis.
"The boost for workers from the Biden minimum wage increase that the Trump administration just nullified was substantial," according to CAP, which cites a Department of Labor estimate from 2021 that the change would impact 327,300 employees in the first year of implementation.
In 2021, the left-leaning think tank the Economic Policy Institute estimated that, taking into account the hundreds of thousands of workers who could see their wages raised through Biden's executive order, the total pay increases thanks to the rule would amount to $1.2 billion in 2022.
"A higher minimum wage for federal contractors helps ensure that taxpayer dollars incentivize good jobs, rather than low-wage jobs where contractors compete with each other in a race to the bottom," according to a statement from EPI following Trump's rescission of the minimum wage rule. "A higher federal contractor wage standard is good for employers and the federal government overall."
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