In a mirror of national politics, California Republicans followed former President Donald Trump’s lead by proposing to end taxes on tips. While Vice President Kamala Harris, who formerly represented California in the U.S. Senate, embraced the measure, California Democrats said no, shooting down the proposed amendment in the California Senate.
“Even Trump and Harris both say we should eliminate the ‘tip tax,’” said the California Senate Republican Caucus in a statement.
Soon after Trump announced his proposal to a crowd in Nevada, which has the highest percentage of tipped workers in the nation, Harris also came out in favor of the proposal. The Budget Lab at Yale University reports there are approximately 4 million tipped workers — 2.5% of all workers nationwide. Many tipped workers earn less than the minimum wage, and thus earn the lion’s share of their income from tips. Some higher-paid tipped professions such as barbers and hair stylists would also benefit from this rule change.
The bipartisan Committee for Responsible Federal Budget says this proposal would likely reduce government revenue by approximately $15 to $25 billion per year.
In the California Senate, Democrats — except for Senate President Pro Tempore Senator Mike McGuire, D-Healdsburg, and State Sen. Nancy Skinner, D-Berkeley, who abstained, voted to put aside the amendment, while all nine Republicans voted for it.
With the legislature having narrowly closed a $47 billion budget shortfall this year through cuts, deferrals, and shifts, it’s unclear what additional measures the state would need to take to offset revenue losses from a potential state-level exemption.
