Vice President Kamala Harris and former President Donald Trump found common ground on tax issues during the election campaign.

On Saturday, during a campaign rally in Las Vegas – where many casino workers rely on tips as part of their pay – the vice president introduced a new policy idea: tax-free tips. “I promise everyone here that if I am president, we will continue our fight for America’s working families, including raising the minimum wage and eliminating taxes on tips for service and hospitality workers,” Harris told a crowd of supporters at the University of Nevada, Las Vegas.

The proposal would affect only a small part of the labor market. About 2.5 percent of all U.S. workers receive tips, according to Yale University’s nonpartisan Budget Lab, and more than a third of those workers, 37 percent, did not earn enough in 2022 to be subject to federal income tax.

Still, the policy has recently become popular among elected officials from all walks of life. In June, Senator Ted Cruz (R-Texas) introduced the No Tax on Tips Act, which would exempt cash tips and credit and debit card fees from federal income taxes, but not from the payroll taxes employers and employees pay. The bill received support from Nevada Democratic Senators Catherine Cortez Masto and Jacky Rosen, who is up for re-election in November. A companion bill introduced by Republican Congressman Byron Donalds of Florida is also currently being considered in the House. Donald Trump endorsed the policy this summer, touting it in campaign appearances and even mentioning it during his speech at the Republican National Convention in July.

“At the heart of our economic relief plan are massive tax cuts for workers, including something that has proven to be extremely popular,” Trump said in Milwaukee last month. “It’s no tax on tips. No tax on tips. No tax on tips. And I learned that recently at a dinner in Nevada.”

It’s no coincidence that both Trump and Harris promoted this idea in Nevada. The crucial swing state, where six electoral votes are up for grabs, has the highest concentration of tipped workers in the country. The Culinary Union, which represents more than 60,000 workers at most casino resorts in Las Vegas and Reno, supports repealing the tip tax and last week endorsed Harris and Walz’s ballot slate.

What this proposed tax law change might mean for off-Strip businesses and the restaurant industry is less certain. Neither campaign has released a detailed plan to implement tax-free tips, and the Senate bill does not include restrictions preventing higher-paid employees from switching their compensation to a tip model to avoid federal income tax.

Could an accountant, lawyer or investment banker really ask a customer to tip them? Could a sole proprietor ask a customer to pay for a product with a tip instead of paying the price on the label? In theory, they could. That’s the criticism the Center for American Progress, a progressive political organization in Washington, DC, made of Senator Cruz’s bill, which does not limit tax-free tips to specific industries or amounts.

“The tip exemption law contains few if any protections to prevent workers or business owners from reclassifying their income as wages or their business profits as tips,” wrote Brendan Duke, senior director for economic policy at the Center for American Progress, in an analysis of the law. “The tax relief from exempting some of these top earners’ income from income taxes would be far greater than tax relief for low-income earners. A married couple earning $1 million, for example, could receive a $180,000 tax relief by converting half of that wage into tax-free tips.”