Edwards said he’s drafting more detailed language and plans on updating the bill as it goes through House committee, and that there will likely be wrinkles to iron out.
The intent is that service workers will only pay state income taxes on the wages they receive from their employer, not on the tips they earn, according to Edwards. Service workers will still have to report gratuities as their total income.
“We have all these tax carve outs for business income deductions and all these sorts of things, and sometimes I think we’re overlooking the working, middle-class folks and I’m trying to figure out how to help them out,” Edwards said. “I think not counting tax on tips is a great opportunity.”
Edwards noted that the bill, should it go into law, might not impact every tipped employee in the state. Only Ohioans making over $26,050 pay income taxes today, which means service workers making below that threshold wouldn’t see a difference. Updated state income tax rates range from 2.75% to 3.5%.
Demetrius Jones, a server at Charlo’s Provisions & Eatery in downtown Springfield, told this news outlet that he supports the initiative.
“I think it’s a good proposal,” Jones said. “I’ve always had my opinions about tips being taxed in any way. I think it will give servers a little opportunity to have a little bit more save-ability, I think — maybe be able to pocket a little bit more cash.”
Butler County state Sen. George Lang, R-West Chester, a proponent for doing away with the state income tax altogether, said he likes the idea in concept but has concerns about how it might be implemented.
“We have to make sure nobody can game the system, that it truly is only going to those that it’s intended to go to,” Lang said.
The bill was welcomed by the Ohio Restaurant & Hospitality Alliance (which represents employers), though the organization did not want to fully endorse H.B. 643 until its final language was set.
“Tipped employees are a critical part of Ohio’s vibrant restaurant industry and ending tax on tips would help to further strengthen their economic condition,” the organization said in a statement. “We look forward to working with Rep. Edwards on this idea and other ways to support Ohio’s restaurant and hospitality community.”
Lawmakers are away on summer break and the bill has yet to draw cosponsors from either side of the aisle, so it’s too early to tell what kind of support there will be on the House floor. However, at least one Democrat, Rep. Willis Blackshear, Jr., D-Dayton, told this news outlet that he “support(s) policies like this that help working Ohioans.”
The bill has not yet been assigned to a House committee. Action likely won’t start on the bill until after Election Day, after which lawmakers will return to Columbus to finish out the waning months of this General Assembly.
National connection
Edwards told this news outlet that he got the idea from Trump, the Republican presidential nominee, who teased his intent to exclude tips from federal income taxes at an early June campaign stop in Nevada, which has one of the largest service industries in the country.
“I think this is a great idea, I wouldn’t do it if I didn’t think it was a great idea,” Edwards said. “It’s really trying to help middle class folks, people that are working in the service industry that might be living paycheck to paycheck.”
Edwards, born and raised in Appalachia, said that the “no income tax on tips” policy pitch is another way for Republicans to shore up support among blue-collar voters in pockets of the state that are gradually turning to Republicans after having historically voted for Democrats due to the party’s worker-friendly policies.
“We’re finding more blue collar, middle class people, common folk people, the same type of people that 12 years ago supported people like (Democrat) Ted Strickland for governor in Appalachia and the Mahoning valley... now those blue collar middle class votes are heavily supporting Trump or Republicans,” Edwards said.
But, despite Republican efforts to woo restaurant and hotel workers this election season, the hospitality workers’ union UNITE HERE recently endorsed Democrat Vice President Kamala Harris for president.
Gwen Mills, the union’s president, said Trump was merely “making a play” for votes while Harris has credibility from having supported unions. Harris, along with President Joe Biden, have argued that service workers would benefit from a higher minimum wage.
The union’s endorsement includes a commitment to have its members knock on more than 3.3 million doors for Harris in swing states that include Pennsylvania, Michigan, Nevada, Arizona and North Carolina.
The Associated Press contributed to this report.
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Avery Kreemer can be reached at 614-981-1422, on X, via email, or you can drop him a comment/tip with the survey below.
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