Democrats are trying to blunt the Republican advantage on the widely popular no-tax-on-tips policy as both parties look to strengthen their appeal to the working class ahead of the midterms.
The most intense of these battles is unfolding in Nevada, where five percent of workers earn tips, about double the national rate. Republicans are looking to flip three of the state’s four congressional districts — which include some regions where the tourism and gambling economy dominates. They have already spent millions on ads targeting Nevada Democrats for voting against the GOP megabill that included the tax deduction for tipped workers, which was pushed by President Donald Trump.
“Everyone knows that that was a massively influential message by the president,” said Robert Uithoven, a GOP strategist who is running the campaign of Lydia Dominguez, one of the Republicans vying for the party’s nomination to take on Rep. Susie Lee (D-Nev.). Uithoven noted that Trump won Lee’s district — which he said includes a large number of workers employed on the Vegas Strip — and carried the state.
Democrats, meanwhile, have blitzed through Las Vegas, Reno and the state’s other tourist hotspots, proclaiming that Republicans generated no such boon for tipped workers there.
“They’re going to see it, they’re going to feel it. They’re already feeling it,” Lee said in an interview with POLITICO. “It’s a raw deal for tipped earners, because it’s not permanent, and it’s so much smaller than what the wealthiest Americans got out of that bill.”
The skirmishing comes as both parties look to control the narrative on the affordability of groceries, housing and other staples, along with the state of household incomes — issues expected to have outsized influence on next year’s midterms.
Moreover, Republicans are trying to better market the omnibus legislation they passed this summer, which hasn’t proven as popular as they hoped. They are zeroing in on individual portions of the megabill that are broadly appealing to working-class voters, and deductions for tipped workers could score the party much-needed political gains after a crushing off-year election defeat last week.
“Nevadans know who put more money back in their pockets, and it wasn’t the Democrat frauds who are trying to claim credit,” said Christian Martinez, a spokesperson for the National Republican Congressional Committee, the House GOP’s campaign arm. “Out of touch Democrats Steven Horsford, Dina Titus and Susie Lee can’t lie their way out of this one.”
Nevada Democrats bristle at Republicans’ characterization of them as followers — not leaders — on tax breaks for tipped workers. They note that the idea was a seminal part of their 2024 campaigns, and chastised their opponents for failing to back an alternative measure, which they said would have offered tipped workers more meaningful breaks, and the elimination of subminimum wages.
The bill fizzled out in Congress, which — according to Horsford, who drew up the measure — indicates the GOP’s efforts are disingenuous.
“My bill, the TIPS Act, does all the things that the tipped workers asked for because I asked them what they wanted included in the bill as I worked on it. That’s where the Republicans got their bill wrong from the beginning. They listened to one person, Donald Trump, and not the workers,” he said.
Titus, who has introduced legislation on the issue that would also raise the regular minimum wage, said: “Exempting tips from income taxes is only part of the solution to increasing the wages of tipped workers.”
The Democrats’ counteroffensive is part of a larger portrait Democrats have spent months drawing up in hopes of demonstrating that the GOP’s promise of beefier refund checks next filing season will be moot for the working class. They’ve pointed to several statistics: Over a third of tipped workersdo not make enough money to pay federal income taxes. Two in five tipped workersrely on Medicaid and other public assistance that the GOP has slashed or could let expire.
And they note that the tax break will lapse in three years unless Congress extends it, while the cuts to public benefits would be permanent.
“D.C. Republicans are giving temporary crumbs to working families,” said Lindsay Reilly, a spokesperson for the Democratic Congressional Campaign Committee, the party’s House campaign arm. “Meanwhile, millions of families are at risk of losing their health care, hundreds of hospitals could close, and countless Americans could lose their jobs — all to pay for permanent tax cuts for billionaires.”
Nevada Democrats also say Trump’s coarse diplomatic relations with Canada have eroded the state’s tourism economy, which is heavily dependent on Canadian visitation, and squandered any windfalls the GOP tax deduction on tips could generate.
“When you have less tourism there, there’s less cars to park, there’s less rooms to clean, there’s less tables to serve,” said Lee, who represents Nevada’s third district, which includes southern Las Vegas. “That’s less tipped income.”
There’s perhaps no group more important for the parties to win over on the issue in Nevada than Culinary Workers Union Local 226, which represents the state’s hospitality workers. But in the union’s eyes, both sides are flailing.
In late October, the union sent a letter to Treasury and the IRS rebuking the limitations of the tax cut in the GOP megabill and asking for the same things Democrats have pushed for: a permanent extension of the tip tax deduction that would also cover automatic gratuities and eliminate the subminimum wage. Neither the agencies nor congressional Republicans have indicated they’re willing to offer concessions since then, to the union’s frustration, said Ted Pappageorge, its secretary-treasurer.
But that shouldn’t serve as a reprieve for House Democrats, even if they earned the union’s endorsement last year, he continued.
“There has to be a real fight with the Democratic Party about a message that is very clear that we are going to tackle the cost of living and support working class, kitchen table voters,” Pappageorge said. “We’ve been very clear, we’re going to talk to Republicans, Democrats and independents, and we’re going to run our own members because we don’t see Democrats focusing on working class issues in a way that is going to win in the midterms.”
Samuel Benson contributed to this report.
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