President Donald Trump's implementation of the "No Tax On Tips" policy is poorly conceived and asking for trouble, University of Michigan economics professor Justin Wolfers told CNN's Phil Mattingly on Monday.
The policy, a key campaign promise Trump made in 2024, was authorized by the GOP's tax cut megabill passed earlier this year. It allows for tips to receive a tax deduction. The policy, along with eliminating taxes on overtime, expires a month before Trump is set to leave office.
"I want to ask, there was some news today," said Mattingly. "The Treasury Department had a list of 68 jobs that would qualify for the no tax on tips provision in President Trump's big beautiful, I guess now law. It was first reported by Axios. The long list includes bartenders, cooks, waitstaff, dishwashers, musicians, gambling dealers, dancers, hotel desk clerks, concierges, parking attendants, massage therapists, manicurists, makeup artists, and many more. I haven't seen the actual reg yet in terms of how that would be written."
"So actually meeting those definitions is going to be interesting to see," he added. "But this issue itself, from an economic perspective, how big of an impact does it have?"
"It's actually remarkably small and remarkably ridiculous," said Wolfers. "Yes, low-wage and medium-income workers deserve help. absolutely. But why those who are in this particular 68 set of occupations? So there's all sorts of other really important jobs — my local trash collector, my carpenter, my plumber, the local sandwich maker who I think do really important work. All of them should be helped. And so no tax on tips is — it's got a bit of alliteration to it, but no economic logic."
Ultimately, he said, "All this is doing is adding more pages to the tax code. There's a really easy way to help working, middle-class Americans. One would be get rid of tariffs that hurt them harder than others. The other would be to give them overall tax cuts rather than targeting tax cuts to the very rich. So what this is, when you look at the bottom line of the budget, it's a very small budget item. So what it is, it's it's gotten a lot of newspaper headlines, but it doesn't actually do much to help that many people and even those who hit the list aren't going to get that much help."
Watch the video below or at the link here.