Vice President Kamala Harris followed her White House opponent, former President Donald Trump, in calling for the elimination of the federal tax on tips at a campaign rally in Las Vegas on Saturday.

It is a popular political stance among Atlanta Civic Circle this week, but some said it did not address deeper issues contributing to the cost of living crisis, such as low wages. Meanwhile, economists and industry groups are concerned about knock-on effects, saying the devil is in the details.

“This is a great idea,” said Katie Giede, a 32-year-old waitress at Waffle House in Conyers who is a member of the Union of Southern Service Workers (USSW).

“Knowing that they’re thinking of us… It would definitely be a start if they eliminated the tax on tips,” she said, adding that it would “help, but what we really need is a living wage to be able to cover our basic needs, like food, doctors and car parts.”

Trump’s plan is simple: no federal tax on tips, period. No income tax, no payroll tax, nothing. He simply wants to “eliminate all taxes on tips.”

This is in line with a bill in the House of Representatives introduced by Matt Gaetz (Republican, Florida) and Thomas Massie (Republican, Kentucky). A slightly different bill in the Senate, introduced by Ted Cruz (Republican, Texas) with the support of Nevada’s two Democratic senators, Catherine Masto and Jacky Rosen, would maintain the payroll tax on tips that go to Social Security and Medicare, but eliminate the federal income tax.

Harris’ proposal is not entirely clear, but it would also keep the payroll tax. According to a Harris campaign official, “she would work with Congress to develop a proposal that includes an income limit and strict requirements to prevent hedge fund managers and lawyers from structuring their compensation in ways that would allow them to try to profit from the scheme.”

Harris would also support an increase in the minimum wage. The federal minimum wage is currently $7.25 per hour, but for tipped workers it is $2.13 per hour. However, if a tipped worker does not make at least $7.25 per hour after tips are deducted, their employer must pay them the difference.

Any plan – whether from Trump or Harris – would require an act of Congress.

The Trump team was quick to label Harris a “copycat,” pointing out that her proposal, unveiled on June 9, was supported by the Culinary Union. The union, a driving force in Nevada politics, endorsed the Harris-Walz ticket on August 9, the day before Harris’s Las Vegas rally.

How would it help service employees?

Two-thirds of tipped workers already pay no federal income tax because they earn so little, according to a report by One Fair Wage, an organization that advocates for a living minimum wage for tipped workers.

A study by the Yale Budget Lab estimates the figure to be nearly a third, pointing to another problem with repealing the tip tax: “The larger and far more uncertain effect would come from behavioral changes that the law would encourage, such as shifts to tip-based employment and tip-based income, which would increase the overall cost of the law,” the group wrote in its analysis.

The concern is that higher earners, such as real estate agents, stockbrokers or hedge fund managers, could classify their income as tips and thus receive enormous tax relief.

Tips have historically been taxed too low because they were cash and often went unreported: Most service employees prefer cash tips because cash cannot be tracked and can easily be put in a pocket.

The Trump campaign pointed out that the IRS tightened taxation on tips under the Biden-Harris administration, but as digital payments and credit card payments have become more common, this form of tax evasion has become less common.

“There are many, many, many establishments that I have worked with, worked for and been associated with that have done illegal things to avoid paying taxes on their employees’ tips,” said Christy Nixon, a 37-year-old manager of a bar in Grant Park. “But those establishments can get in trouble if they ever get an audit of these cases.”

Nixon believes tips should be tax-free at least up to a certain amount, just as the IRS does not tax gifts up to $18,000, the 2024 threshold. “I believe it should not be taxed because it’s a gift,” she said.

Abby Turano, a spokeswoman for the Metro Atlanta Chamber, said in an email that Trump and Harris’ proposals have sparked conversations, but the business trade group currently has more questions than answers.

“We have not yet seen a thorough study of the economic impact of these latest proposals and are curious to see what the studies will reveal,” she wrote. “Of particular interest would be a proposal that takes into account the economic impact of the tax shift — would other taxes be raised to make up the difference? Or would spending be cut? Nothing more specific has emerged yet, so we are all curious to see more substantive information.”

The Committee for a Responsible Federal Budget, a bipartisan watchdog group, estimates that Trump’s plan would increase the budget deficit by $150 billion to $250 billion over 10 years. The group estimates that Harris’ plan would add $100 billion to $200 billion over the same period.

Nixon, the bar manager, expressed concern that waiving federal income tax on tips could reduce tip amounts, especially if it were coupled with a mandated minimum wage for employees who receive tips. “I think if a minimum wage was implemented for employees who receive tips, people would think they don’t have to tip, but the minimum wage is not a living wage, so I’d rather stay at $2.13 and get tips.”

But Giede, who makes $3 an hour at Waffle House without tips, said tips are just too variable to rely on, and she struggles to make ends meet for herself and her five-year-old son.

“It’s so unpredictable,” she said. “It’s not the client’s job to pay our wages. The employers are the ones who hired us, and it should be their job to make sure we can meet our basic needs.”