Beltway Buzz, August 16, 2024

POTUS Candidates Want No Taxes on Tips. As the presidential campaign heats up, Vice President Harris and former President Trump have both voiced support for the same policy concept: exempting employee tips from taxation. Harris’s proposal would exempt tips from federal income taxes and raise the federal minimum wage, while Trump’s would exempt tips from both income and payroll taxes. Trump announced his proposal at a June 9, 2024, rally in Nevada, while Harris announced her proposal at an August 10, 2024, rally in—you guessed it—Nevada. The Silver State could play a pivotal role in the November elections—with regard to both the U.S. Senate and White House—and it is perhaps no coincidence that a large number of tipped workers reside there. Some additional thoughts on this “who wore it better” policy proposal are below:

• Just days after Trump’s June 9 announcement, Republican Senators Ted Cruz (TX), Steve Daines (MT), Rick Scott (FL), and Kevin Cramer (ND) introduced the No Tax on Tips Act. The bill would amend the Internal Revenue Code to allow workers to claim a deduction at filing equal to 100 percent of the “cash tips”—cash, credit and debit card charges, and checks—they received during the taxable year. The Democratic senators from Nevada, Jacky Rosen and Catherine Cortez Masto, are co-sponsors of the bill. 
• Tips and workers who receive cash tips are not exactly new subjects of public policy debates. In 2021, the U.S. Department of Labor (DOL) finalized a regulation that changed the circumstances in which an employer can take a “tip credit” to satisfy its minimum wage obligations.
• More tax talk can be expected. Many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are expiring at the end of 2025, so tax policy debates are expected to dominate the first session of the 119th Congress. The Buzz has been monitoring a bill, the Tax Relief for American Families and Workers Act, which would extend some of the TCJA’s provisions. Despite having received bipartisan passage in the House, that bill has stalled in the U.S. Senate.

More on Walz. Speaking of campaign promises, vice presidential candidate Tim Walz addressed the American Federation of State, County and Municipal Employees (AFSCME) 2024 convention this week. Obviously, the Harris/Walz labor and employment policy agenda featured prominently in Walz’s remarks. Walz promised that Harris would sign the Protecting the Right to Organize (PRO) Act into law and would also prohibit employers from speaking to employees about the pros and cons of unionization. Walz enacted this later policy prescription into law in Minnesota, and National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo has made banning employer speech a priority—something that the three Democratic members of the Board indicated in a recent decision that they are keen to address.

Fed Court of Appeals: Robb Firing Was Legit. This week, the U.S. Court of Appeals for the Sixth Circuit ruled that President Biden’s dismissal of Peter Robb, the NLRB’s general counsel, in January 2021 was lawful. The court determined that the National Labor Relations Act “contains no provision restricting the President’s removal power” of the Board’s general counsel, and that even though Congress set the general counsel’s term at four years, “[t]he Supreme Court has long held that a fixed term of office, without any additional limitation, does not impact the President’s discretionary removal power.” The Fifth and Ninth Circuits have also upheld Robb’s dismissal. Obviously, these decisions could play a factor in General Counsel Abruzzo’s continued tenure during a potential Trump administration in 2025.

Foxx Seeks Answers From Su on Independent Contractor Regulation. Virginia Foxx (R-NC), the chair of the House Committee on Education and the Workforce, continues to press the DOL and Acting Secretary of Labor Julie Su on the agency’s regulatory agenda. Late last week, Rep. Foxx sent Su a letter requesting “information about the administration’s efforts to eliminate the independent contractor model and classify as many workers as employees as possible in order to increase government control over workers.” The letter is a follow-up to previous questions for the record (QFRs) that Rep. Foxx submitted following Su’s May 1, 2024, appearance before the committee. Rep. Foxx concludes that “DOL’s failure to provide complete responses to oversight on this matter could lead the Committee to take compulsory action.” The letter is further evidence demonstrating that the DOL’s independent contractor regulation, which is still the subject of multiple legal challenges, could be the subject of further regulatory and/or legislative efforts in 2025.

“Time is Money” Initiative. On August 12, 2024, the Biden administration launched its “Time is Money” initiative, which is intended “to crack down on all the ways that corporations—through excessive paperwork, hold times, and general aggravation—add unnecessary headaches and hassles to people’s days and degrade their quality of life.” The initiative touts pending actions from various agencies that would allegedly make it easier to cancel subscriptions, “to let customers talk to a human by pressing a single button,” and “crack down on ineffective and time-wasting chatbots used by banks and other financial institutions in lieu of customer service.” Of course, for anyone who has prepared their own taxes, waited in line at the DMV, or opened a business, this probably comes off as a “people in glass houses” initiative.

President Tyler: Quite a Riot. On August 16, 1841, President John Tyler vetoed legislation that would have established the Second Bank of the United States. The bank bill was pushed by Senator Henry Clay of Kentucky, leader of the Whig Party, and was viewed as a way to push the country out of troubled economic times. President Tyler, also a Whig, defied his party by vetoing the bill, arguing it infringed on states’ rights (banks were quite an issue in those days). The veto led to a massive riot two days later on the White House lawn, where a drunken mob fired guns and hung Tyler in effigy. The riot led Congress to establish the Auxiliary Guard in Washington, D.C., to beef up security and police presence, particularly at night.