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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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'Unfit for Office'? Fetterman's Fitness Questioned Amid Reports of Erratic Behavior
"We can agree or disagree on Fetterman's politics," wrote one journalist, "but I don't see how anyone can look at what's happening on a human level... and not think that the best thing for him would be to resign."
May 08, 2025
Following reporting about the behavior of U.S. Sen. John Fetterman—including concerns voiced by current and former staff have concerns about the mental wellbeing of the Democratic lawmaker from Pennsylvania—a growing number of political observers are openly questioning his ability to serve in public office.
A story in New York Magazine last week featuring the concern by staffwas followed by new Associated Pressreporting Thursday, which recounted a recent meeting between Fetterman and representatives from a teachers union that went awry when Fetterman began shouting and asking why "everybody is mad at me."
"Why does everyone hate me, what did I ever do," Fetterman reportedly said, according to someone who was briefed on what had taken place, the AP reported. A staff member ended the meeting and ushered the visitors out, and then broke down crying in the hallway.
Fetterman bested Mehmet Oz, the current head of the Centers for Medicare & Medicaid Services, in a race for the U.S. Senate in 2022, despite suffering a stroke while on the campaign trail. In 2023, after being sworn into the Senate, Fetterman checked himself into the hospital to seek treatment for clinical depression, and drew praise for being open about his diagnosis and seeking care.
His standing among progressive supporters has also soured over the past year and a half in part due to his unwavering support for Israel during the country's deadly military campaign in Gaza.
Fetterman was also the only senate Democrat to fly down to Mar-a-Lago and meet with U.S. President Donald Trump following Trump's victory in 2024.
Jeet Heer, the national affairs correspondent for The Nation, reacted to the AP's reporting with expressions of concern and suggested it may be time for the Democrat to step aside.
"We can agree or disagree on Fetterman's politics (I'm not a fan of his shift)," wrote Heer, "but I don't see how anyone can look at what's happening on a human level, to this man and his family, and not think that the best thing for him would be to resign so he can look after himself better."
According to New York Magazine, 14 months after Fetterman's discharge from the hospital, his former chief of staff Adam Jentleson, sent a long email to the medical director who had overseen Fetterman's care, writing that he thought Fetterman was on a "bad trajectory" and sharing concerns that if nothing changed, Fetterman "won't be with us for much longer."
In the email, Jentleson said he was concerned that Fetterman appeared not to be taking his meds, that he was displaying megalomania and conspiratorial thinking, "lying in ways that are painfully, awkwardly obvious to everyone in the room," and engaging in "repetitive and self centered monologues."
To the medical director, Jentleson also detailed that Fetterman had purchased a gun, engaged in a pattern of self isolation, and that he drove his car recklessly to the point that staff would not ride in the car with him.
"Former and current staffers paint a picture of an erratic senator who has become almost impossible to work for and whose mental-health situation is more serious and complicated than previously reported," the magazine reported.
"Jesus," wrote Aaron Regunberg, a progressive policy advocate wrote on social media in response to the reporting," John Fetterman should not be a U.S. Senator."
Jonathan Cohn, another progressive activist, commented on his personal X account that Fetterman was "creating an unsafe environment for his staff and constituents, and that makes him unfit for office."
On Tuesday, speaking to CNN, Fetterman called the article in New York Magazine a "one-source hit piece, and it involved maybe two or three and anonymous disgruntled staffers saying just absolute false things."
Few Democrats have come to Fetterman's aid in the wake of the reporting. There's been increased private talks about primary challenges to Fetterman, perPolitico, and according to the outlet "some Pennsylvania Democrats have begun to quietly review the rules about what would happen if he stepped down and whispered about potential replacements."
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'The Senate Must Demand Answers' Over Trump's Purge of Inspectors General
Their dismissals raise "significant concerns about maintaining the integrity and continuity of oversight," according to civil society groups.
Feb 11, 2025
Nine civil society groups are demanding that the Senate take action "to reaffirm its oversight role" in response to U.S. President Donald Trump's removal of at least 17 inspectors general at various federal agencies last month—a move that critics have called illegal.
Inspectors general are independent government watchdogs who are tasked with detecting and preventing waste, fraud, and abuse at federal agencies. They were installed as part of post-Watergate reforms.
The work of inspectors general is "especially important during times of presidential transition to ensure that agencies continue to operate effectively and serve the public," wrote the authors of the letter, which was addressed to the members of the U.S. Senate and dated Tuesday.
"The removal of multiple [inspectors general] at once raises significant concerns about maintaining the integrity and continuity of oversight. These abrupt dismissals undermine the ability of [inspectors general] to conduct thorough and impartial investigations, potentially deterring accountability at a critical time," they added.
The letter is signed by nine groups: American Oversight; Citizens for Responsibility and Ethics in Washington; Hispanic Leadership Fund; National Taxpayers Union; Project on Government Oversight; Public Citizen; R Street Institute; Taxpayers for Common Sense; and Taxpayers Protection Alliance.
"The Senate must demand answers," according to the groups, because federal law mandates that the president must give Congress 30 days advance notice of intent to remove an inspector general, along with the reason for the removal.
Hannibal Ware, chairperson of the Council of the Inspectors General on Integrity and Efficiency, cast doubt on the legality of the firings in a January 24 letter sent to Sergio Gor, director of the Presidential Personnel Office, in response to the removals.
"I recommend that you reach out to White House counsel to discuss your intended course of action. At this point, we do not believe the actions taken are legally sufficient to dismiss presidentially appointed, Senate-confirmed inspectors general," Ware wrote in the letter.
One of the inspectors general at the time described the removals as a "widespread massacre."
Viewed with hindsight, the firings of the inspectors general can be seen as an opening salvo in a string of high-profile, legally dubious removals that Trump has carried out over the past few weeks.
Trump recently dismissed a Democratic member of the National Labor Relations Board and "purportedly" removed the special counsel at the Office of Special Counsel, in both cases prompting lawsuits, among other removals.
Some senators, for their part, have already condemned Trump's removal of the inspectors general. Last week, over three dozen senators signed a letter to Trump saying that his actions violated removal protections and that they should be reinstated.
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