Emmer for Governor

Emmer: No Taxes on Tips

Emmer Releases Tax Proposal for Hospitality Industry

July 13, 2010
11:56 AM
Minnetonka

Tags: hospitality industry, minimum wage, servers, taxes, taxes on tips, tip credit, tips, Tom Emmer, waiters

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Tom Emmer announced today a proposal to eliminate the state income tax on tips collected by workers in the hospitality industry. The tax cut for servers was part of a larger package he characterized as a win/win for hospitality in Minnesota.

“Tips should be between the customer and the server, and state government has no business reaching in and taking a portion of that income,” said Emmer. “Employers also need some common sense tax reforms so they can stay competitive and keep providing the jobs we need in this economy.”

“I have not proposed reducing the minimum wage. Instead, I have always been about putting more money in the pocket of wage earners, more money in the pocket of entrepreneurs and more money in the pocket of Minnesota’s families.”

Emmer proposes tax relief aimed at both employers in the hospitality industry and their employees:

• Eliminate state income taxes on most tipped wages. Currently tipped employees are required to pay taxes on both their base income and the tips they receive. This proposal would exclude from taxation the first $20,000 in tips collected for Minnesota’s approximately 45,000 tipped employees. The tax exemption would save these taxpayers approximately $17 million per year. For servers making $20,000, the exemption would reduce taxes by about $500; at $30,000 it would reduce taxes by $800.
• Allow restaurant owners the same sales tax deductions for capital equipment enjoyed by other industries. They are buying equipment to produce a product for sale to consumers – the same tax breaks should apply to them.
• Eliminate the tax penalty for providing free meals to employees. Currently businesses are required to pay tax on free meals provided to employees, which is an outrageous tax grab that penalizes businesses for taking care of their employees.

“Minnesotans deserve leadership that is about bringing people together, not tearing them apart. Both businesses and wage earners are hurting in this economy, and it’s time somebody finds solutions that help everybody.”

On Wednesday, Emmer will hold a town meeting with servers in the hospitality industry to listen to their concerns about jobs and the economy as part of the Freedom and Prosperity Project. The meeting begins at 3:00 pm at Ol’ Mexico Restaurante in Roseville at the intersection of Lexington and Larpenteur Avenues.