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Why Trump and Harris are pandering to Nevada tip workers

Some subsets of the electorate get special attention come election time: union members, urban minorities, young idealists. This year, Nevada hospitality workers are the surprise target of bipartisan political pandering.

Republican Donald Trump and Democrat Kamala Harris both say they want to get rid of federal tax on tip income, such as that earned by waiters, bartenders, drivers, and caddies. That would cover only about 2% of all workers, so it doesn’t exactly have widespread appeal.

But, Nevada. The Tax Policy Center recently analyzed labor force data and pointed out that Nevada has the highest portion of tipped workers of any state, by far: 5.5% of the labor force, nearly three times the national average. That’s obviously due to the gambling and entertainment hub of Las Vegas, plus Reno and the Lake Tahoe area.

Nevada is also one of seven swing states likely to decide this year’s presidential duel between Harris and Trump. It only has six electoral votes, but that could be decisive in what is likely to be a very close race decided by small numbers of voters in those seven swing states.

If Harris and Trump win all the votes likely to go their way , that will leave seven toss-ups currently too close to call. If Harris wins Pennsylvania, Michigan, Wisconsin, and Arizona, while Trump takes North Carolina and Georgia, that would leave Harris with 267 electoral votes and Trump with 264. Whoever wins Nevada and its 6 votes would become the next president. Other pathways could make any of those seven swing states the decider.

It's cynically clever to dangle a tax break targeting Nevada hospitality workers, which Trump’s campaign figured out first. There are around 350,000 hospitality workers in Nevada, many of them earning income from tips. Joe Biden won Nevada in 2020 by less than 34,000 votes . If Trump could win the votes of more tipped workers, it might help him take the state.

Harris obviously felt that was enough of a risk to copy Trump’s idea — which she announced at a rally in Nevada on Aug. 11. She doesn’t get credit for coming up with the idea, but she may have neutralized any advantage it could have given Trump.

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Any voter would say yes if you offered them a tax cut. Actually making it happen is a completely different matter. Only Congress can change tax law, through legislation. If Congress passed tax cuts for everybody who wanted them, there would be no government revenue to pay for the services, benefits, and infrastructure that people also want. And no matter how deserving tipped workers think they are, and may actually be, eliminating taxes on tips is a stinker of an idea, policy-wise .

In Nevada, tipped workers have it relatively good. The minimum wage for tipped workers in the state is $12, fifth-highest in the country after Washington, California, Oregon, and Hawaii. At the other end of the scale, 16 states have a minimum wage for tipped workers (different from the minimum for non-tipped workers) that's a paltry $2.13.

Why Trump and Harris are pandering to Nevada tip workers
Manny Picon Delgado demonstrates flare bartending onstage during the United States Bartenders Guild Shake it Up Championship during day three of the 2024 Bar & Restaurant Expo at the Las Vegas Convention Center on March 20, 2024, in Las Vegas, Nevada. (Bryan Steffy/Getty Images for Nightclub & Bar Media Group) (Bryan Steffy via Getty Images)

If the goal were to help low-income workers in general, you’d never single out just those who earn tips, since they’re a small fraction of the workforce. What you might do instead is raise the federal minimum wage, which has been stuck at $7.25 since 2009 and has been severely eroded by inflation. As part of that, you could raise the minimum for tipped workers from the insulting $2.13.

Harris and Trump each contend they have other plans to help low-income workers. Harris wants new tax breaks for working parents and guaranteed benefits such as paid leave. Trump says his plans to maximize fossil fuel production and make businesses more profitable will lower prices and help lower-paid workers the most. It’s almost as if they don’t have to single out tipped workers at all.

Except to win Nevada.

Rick Newman is a senior columnist for Yahoo Finance . Follow him on X at @rickjnewman .

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