Mueller: Servers’ tips belong to them, not IRS
September 14, 2014
It’s a well-known fact that waiters and waitresses get paid less than minimum wage. That leaves restaurant employees relying on their tips for their income. The IRS has deemed it appropriate to tax servers’ tips and it is ripping off servers everywhere.
The hourly wages of servers across the country vary by employer. An employee at Texas Roadhouse here in Ames only makes $4.35 per hour while an employee at Flat Top Grill in Illinois makes around $5.50, with an increase of 25 cents every six months.
According to the Economic Policy Institute, “These pay disparities are created by an obscure and often misunderstood federal provision called a ‘tip credit,’ which allows employers to pay tipped workers below the binding federal or state minimum wage.”
Basically, restaurants can justify paying their servers well below the minimum wage because servers receive tips. In the past, servers would be taxed on their below minimum wage income. In recent years, the IRS has decided to tax servers’ tips as well.
The higher your tip number is for every pay period, the lower your paycheck will most likely be. For example, paychecks at Texas Roadhouse will take however much you made off your hourly wage for the week, add in your declared tips for the week, tax that total number and then subtract the declared tip amount.
The method of taxing servers on their declared tips is a huge rip-off to servers across the nation. Samantha Hamlin, a recent ISU graduate, works at Texas Roadhouse part time and works full time at a vet clinic in West Ames.
Hamlin said her lowest paycheck at Texas Roadhouse was for 50 cents. Yes, you read that correctly, she was only paid 50 cents, thanks to taxes.
“It makes me really angry,” Hamlin said. “I don’t like it. I feel like it’s unfair we get taxed so much because we don’t make a lot as it is.”
You might be wondering how someone getting paid way under minimum wage can receive a paycheck that wouldn’t even cover something on McDonald’s dollar-menu. The answer leads back to tips. Servers are supposed to accept such a low paycheck because their tips are supposed to be enough.
However, a majority of servers across the globe feel their tips are not cutting it.
“It’s not enough. The system is unfair and tip share is a joke,” said Hannah Drieir, sophomore in early childhood education, when asked how she felt about her average tip amount.
While Drieir agreed that servers rely on tips heavily, she was not completely sure if she wanted the concept of making tips to change. Servers like getting tips because it’s a reward for all their hard work and they are not sure if they want to skip tips all together. Instead, servers want more fairness on how they get paid.
It is not impossible to pay servers their residing state’s minimum wage while also receiving tips. In fact, seven states—such as Minnesota—“require employers to pay tipped workers the same minimum wage as non-tipped workers,” according to Dana Liebelson at MotherJones.com.
There are certain circumstances that can occur during a diner’s experience that do not necessarily reflect the server’s personal service, but the server catches the blow on tips. If a hostess is rude to the guest, it will reflect on the server’s tip. If the chef over or under cooks a guest’s food, it will reflect on the server’s tip.
Overall, the server pays for other people’s mistakes and most diners do not understand this. A server can provide the best service to every table for an entire night and will always have the possibility of getting stiffed.
It is not fair, in any way, for a server to make less than minimum wage with the possibility of guests tipping nothing at all. Servers work very hard to make sure that every guest’s visit is extraordinary, and getting low tips, or no tip at all, is discouraging and a huge slap to the face.
Servers should be allowed to at least make minimum wage if tips are going to be taxed. Leaving a college student with paychecks less than one dollar is unfair and irresponsible on the part of the employer. As for restaurant diners, Danielle Nygard, sophomore in political science and part-time restaurant employee, has some advice.
Nygard advised that guests “remember that your table is not the only table your server has. Think about the possibility that if there is a mess up, it might not be on the server’s end.”