WASHINGTON (TN) — Former President Donald Trump and Vice President Kamala Harris want to eliminate taxes on tips for employees.

Trump had already touted this idea earlier this summer. A similar proposal for a bipartisan, bicameral system was introduced in July and is currently being considered in Congress.

“We will eliminate the tip tax for millions of restaurant and hospitality workers and seek further tax cuts,” Trump’s program states.

In a campaign speech on Saturday, Harris said she supports raising the minimum wage.

I promise everyone here that as President, we will continue to fight for the rights of working families, including raising the minimum wage and eliminating the tax on tips for service and restaurant workers.

Several analyses show that these proposals would deprive the federal government of money.

“We estimate that exempting all tips from federal income and payroll taxes would reduce federal revenues by $150 billion to $250 billion over a ten-year period, assuming static values. When taking behavioral effects into account, the revenue reduction could be even more significant,” the Committee for a Responsible Federal Budget said of Trump’s plan.

“We estimate that exempting tips from federal income tax and increasing the minimum wage would increase deficits by $100 billion to $200 billion over 10 years before accounting for changes in tipping behavior; the proposal could increase deficits even further when behavioral effects are fully accounted for,” the committee said in describing Harris’ plan.

History of tipping

The custom of tipping dates back to the Middle Ages in Europe, when masters offered their servants a bonus for good work. However, after the Civil War, the custom became common practice in the United States. According to historians, many freed slaves took jobs as servants, barbers, waiters, etc. and were paid either nothing or very little, on the condition that customers give a small tip instead. But in 1938, the federal government passed the Fair Labor Standards Act (FSLA), which required employers to pay a minimum wage to their tipped employees.

Currently, the federal minimum wage is $7.25 and the minimum wage for tipped workers is $2.13.

When the FLSA law was passed in 1938, tips were counted as wages and thus taxable income. But it wasn’t until 1982 that the federal government really began to restrict tip reporting and ensure that they were taxed. Congress passed the Tax Equity and Fiscal Responsibility Act to generate more tips through tax increases, spending cuts, and other measures. The TEFRA law requires employees to report tips to their employers and requires employers to ensure that their employees follow the tip reporting protocol.