☕ Tax-free tips

Is banning taxes on tips a good idea? August 12, 2024 [View Online]( | [Sign Up]( | [Shop]( [Morning Brew]( PRESENTED BY [CompareCredit]( Good morning. Los Angeles saw Paris clean up the River Seine ahead of the 2024 Olympics, and said: “We’ll raise you one further: We’ll clean up the 405.” Mayor Karen Bass has pledged to hold a “no-car Games” in 2028, meaning that the only way to access the LA sports venues will be via public transportation. Good luck! —Neal Freyman MARKETS: YEAR-TO-DATE Nasdaq $16,745.30 +13.40% S&P $5,344.16 +12.68% Dow $39,497.54 +4.73% 10-Year 3.942% -0.4 bps Bitcoin $58,665.16 +38.80% Oil $76.98 +9.38% Data is provided by *Stock data as of market close. [Here's what these numbers mean.]( - Markets: Last week, Wall Street was [taken for a ride]( on a wooden roller coaster—it was bumpy, there were dives, there were climbs, and you were scared the entire thing was going to collapse—but in the end, stocks pulled into the station right where they started. Heading into the new week, investors are still a bit shaken up, and renewed jitters about an economic downturn could be here to stay.  ECONOMY [Harris, Trump want your tips to come tax-free]( [Close-up of comical tip jar with sign with pun reading Feelin Tipsy at Mendocino Farms restaurant in San Ramon, California]( Collection/Gado/Getty Images At a rally on Saturday, Vice President Kamala Harris pledged to [eliminate taxes on tips]( for hospitality workers should she win the White House, echoing a campaign promise her opponent, former President Trump, made in June. So, that means both major party candidates have endorsed tax-free tips, giving momentum to a policy that makes most economists break out in hives. Location, location, location. It’s revealing where Harris and Trump called to end taxes on tips: at events in Las Vegas, Nevada, a tourist-dependent state with the [highest concentration]( of tipped workers in the country (25.8 waiters per 1,000 jobs), per the AP. The two candidates want to show they’re looking out for service workers in this swing state that could play a key role in November’s election. The current state of taxes-on-tips Under existing tax law, tips are treated as standard income and are subject to payroll taxes and federal income tax. Neither candidate explained whether their plan would remove one of those taxes (or both), and tipped income is infamously underreported to the IRS. Most economists and tax analysts say banning taxes on tips is a misguided policy that would have damaging secondary effects. Here are some of their main critiques: - The majority of workers wouldn’t benefit. And that’s because they don’t [make enough]( to pay federal taxes. Two-thirds of US restaurant workers do not meet the income threshold to pay federal income taxes, according to the Census Bureau’s American Community Survey. The workers who would benefit the most would likely be servers at high-end restaurants. - It would further deplete the US’ bank account. Exempting tipped income from taxes would reduce federal revenue by $150 billion–$250 billion, according to the nonpartisan Committee for a Responsible Federal Budget. - It would lead to accounting chaos. In a world of no taxes on tips, think about all the Hula-Hoops employees and companies would jump through to take advantage of the new system and ensure more income was reported as tips. Many advocates for low-wage service workers, including the group One Fair Wage, don’t even support the policy. Instead, they want to see an increase in the minimum wage for tipped workers and worry that ending taxes on tips would distract from that effort. Looking ahead…while candidates can make campaign promises, any changes to federal taxes would require an act of Congress. PRESENTED BY COMPARECREDIT [The thing about paying interest?]( [CompareCredit]( It sucks. Big-time. But CompareCredit’s got two cards on their radar that charge [0% interest until nearly 2026](. Yep, you read that correctly. Zero interest. How could it get any better? Well, these bad boys also come with enormously generous rewards and perks. We’re talkin’ up to [5% cash back in everyday shopping categories]( like restaurants, groceries, gas—all the good stuff. Plus, applying is a total breeze: It’s easy and secure, and you can get a decision in as little as 60 seconds. [Wave bye-bye to interest woes](. WORLD [Tour de headlines](#) [Magic Kingdom at Disney World]Joseph Prezioso/Anadolu Agency via Getty Images Magic Kingdom will get its biggest expansion in history. Americans may be [avoiding theme parks]( this summer, but Disney is betting billions that it’s a short-term blip. At its D23 Expo, the company unwrapped the details for a [massive expansion]( of its parks, including a land at Magic Kingdom focused on its villains and new attractions centered around Avatar, Coco, Cars, and Monsters, Inc. Disney will also build four new cruise ships by 2031, bringing the total to 13 from five currently. The new lands are a key part of Disney’s $60 billion investment in experiences over 10 years, and there’s a lot at stake: The company reported a surprise decline in the division’s profits this summer. Trump and Vance want more control over the Fed. The Republican VP nominee, JD Vance, said he [“absolutely” agreed]( with Trump’s assertion that the president should be involved in the Fed’s interest rate decisions. At a press conference last week, Trump claimed that he would have a “better instinct” than Fed officials in determining monetary policy and should at least be consulted, [alarming]( investors and economists for whom the Fed’s independence from political considerations is sacrosanct. Democratic presidential nominee Kamala Harris said she couldn’t “disagree more strongly” with Trump, adding, “I would never interfere in the decisions that the Fed makes.” Women’s basketball team helps US tie China for most golds. A day after Team USA men’s basketball narrowly defeated France for the gold medal, the women did the same for their [eighth straight Olympic gold medal]( and 61st straight win in Olympic competition. It was a huge victory in the medal race, too, because it meant the US tied China for the most gold medals won throughout the tournament with 40 (the US earned the most total medals by far). Meanwhile, American Jordan Chiles has to [return her bronze medal]( in the floor exercise due to a scoring error, prompting US Olympic officials to say they’ll appeal on Chiles’s behalf. MEDIA [NBC awarded gold for Olympics coverage]( [Snoop Dogg attends a skateboarding event in Paris]( Gottschalk/DeFodi Images via Getty Images Following the Covid-marred Tokyo Olympics in 2021, NBC execs wondered if their premier sports property was going the way of the Academy Awards with declining cultural cachet and plummeting viewership. But after the Paris Olympics wrapped up yesterday, the mood at 30 Rock couldn’t have been more ebullient. Ratings [rebounded]( in a big way, while NBC’s innovative coverage of the Games earned widespread praise. - Through 13 days of the Olympics, viewership of Paris was up 76% over Tokyo. - If the Summer Olympics were an original streaming series, it would [rank second]( behind only Bridgerton in total viewing time this year, according to The Hollywood Reporter. Some of the rebound from Tokyo can be chalked up to a more accessible time zone in Paris for American viewers and the absence of Covid (minus Noah Lyles). But NBC also made savvy bets that kept people glued to their screens, including its whip-around program Gold Zone, making all of the events available live on its streaming service Peacock, and ensuring Olympics-pilled celebs like Snoop Dogg were front and center. Plus, relaxed rules around [athletes posting on social media]( sent their unvarnished reactions to the top of your feed. Looking ahead…NBC will hope to perfect the magic potion it conjured up in Paris to further juice interest in the 2026 Winter Games in Milan and the 2028 Summer Games in Los Angeles. TOGETHER WITH SKY QUARRY [Sky Quarry]( From shingles to shares. [Sky Quarry has developed a groundbreaking application]( that can convert asphalt shingles into sustainable oil and other resources. Their refinery just generated $50m in 2023, and they plan to open a flagship extraction facility by 2025. To help accelerate their growth, they’ve opened up a [limited-time investment opportunity ahead of their planned Nasdaq listing](. STAT [Prime number: Is anyone going to Burning Man?](#) [Art structure on the Playa on Friday, September 31, 2006, part of the Burning Man Festival.]Carlos Avila Gonzalez/The San Francisco Chronicle via Getty Images Burning Man is losing its aura. Two weeks before the start of the art festival in remote Nevada, “demand has dipped significantly,” according to Bloomberg, a [sweeping change]( from the past 13 years when tickets sold out almost instantly. On internet forums, sellers offering tickets well below face value aren’t finding any buyers, and the nonprofit behind the festival is pushing last-minute tickets on demand, something it’s never had to do before. One longtime Burner told Bloomberg that the event, which has increasingly become a tweetup for Silicon Valley techies, “has gone a little past its peak cultural relevance” and that “the pseudo-mainstreaming of it is making it less cool.” CALENDAR [The week ahead](#) [Grocery shopper with cart in Walmart]Jeff Greenberg/Getty Images US consumers in the spotlight: How much have you been shopping? We’ll find out this week when crucial July retail sales data is released on Thursday, and Walmart and Home Depot report earnings. The resilience of the US consumer is at the heart of recent concerns over a potential downturn since consumer spending drives 70% of the US economy. So far this earnings season, companies have given more [mixed signals]( than a menu offering jumbo shrimp. A pivotal week for cease-fire talks: US, Qatari, and Egyptian mediators have set Thursday for a [final round of negotiations]( between Israel and Hamas for a cease-fire in Gaza, though Hamas yesterday said it rejected the countries’ invitation for several reasons, including Israel’s assassination of Hamas leader Ismail Haniyeh. On Saturday, Israel drew international condemnation for a strike on a school that killed at least 80 people. Israel said it was targeting a Hamas “command and control center” and that 19 militants had been killed in the strike. Everything else… - VP Kamala Harris said she’ll reveal her [official economic policy platform]( this week. - The Premier League returns for a new season on Friday. Can anyone stop Manchester City? They’ve won four straight titles. - Post Malone goes country with his latest album, F-1 Trillion, dropping on Friday. NEWS [What else is brewing](#) - [Susan Wojcicki]( a longtime Google exec who ran YouTube, died at 56 after living with lung cancer for two years. - [Ukrainian forces]( have pushed 30km inside Russia, Moscow said, in their most extensive incursion into Russian territory since Vladimir Putin invaded in 2022. - [The US]( has offered to pardon Venezuelan President Nicolás Maduro in exchange for him acknowledging he lost the country’s election last month and leaving office in January, per the WSJ. - [The husband and wife duo of Ryan Reynolds and Blake Lively]( ruled the box office this weekend. It Ends With Us, starring Lively, pulled in an impressive $50 million in its opening weekend. And [Deadpool & Wolverine]( featuring Reynolds as the foul-mouthed superhero, topped $1 billion at the global box office. RECS [Monday to-do list image] Watch: The [trailer]( for an upcoming movie about Saturday Night Live’s earliest days. Roam: Nicholas Kristof’s tips for visiting the [world’s best places](. Browse: A map of [independent bookstores]( in the US. Read: [How Bowling Green, KY,]( became the weight loss drug capital of America. Did you hear that? Most hearing aids have one processor. [These bad boys]( have two, processing speech and noise separately. It means speech gets clearer and crisper. [Experience the clarity]( *A message from our sponsor. GAMES [The puzzle section](#) Turntable: Reminder—this game has a new “hints” feature to give you an assist when you’re stuck. [Get playing here](. Geography trivia Which US state is closest to Africa? SHARE THE BREW [Share Morning Brew]( with your friends, acquire free Brew swag, and then acquire more friends as a result of your fresh Brew swag. We’re saying we’ll give you free stuff and more friends if you share a link. One link. Your referral count: 0 [Click to Share]( Or copy & paste your referral link to others: [morningbrew.com/daily/r/?kid=4904f90a]( ANSWER Maine, by a lot. Africa is farther north than you might think! Word of the Day Today’s Word of the Day is: ebullient, meaning “cheerful and full of energy.” Thanks to Felix from SoCal for the uplifting suggestion. Submit another [Word of the Day here](. ✳︎ A Note From Sky Quarry This is a paid advertisement for Sky Quarry’s Regulation A offering. Please read the offering circular at [investor.skyquarry.com](. Written by [Neal Freyman]( Was this email forwarded to you? Sign up [here](. 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