Patriot,

Recently on the campaign trail, former President Donald Trump
came out in support of ending the tax on tips.

The idea will sound familiar to my longtime supporters. I ran on
this promise in my 2008 and 2012 presidential campaigns and first
introduced the Tax-Free Tips Act in 2007.

Besides the arguments that would apply against every other kind
of tax, the tax on tips is especially odious because tips are, in
truth, not wages but gifts.

As I argue in my latest column - read it below - the debate over
taxes has become completely contorted, to the point that people
argue about whether the government can "afford" tax cuts - rather
than whether the government can afford what they buy with the
people's confiscated money.

It's encouraging to see this idea brought back, and I hope it
resonates with the American people, as it did with my supporters.


If you support Campaign for Liberty's efforts to rein in federal
spending before it gets any further out of control, please
support Campaign for Liberty's efforts with a contribution.
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For Liberty,

Ron Paul
Chairman


Stop Taxing Tips

Donald Trump recently promised that, if he wins the November
election, he will support eliminating taxes on tips as part of
his proposal to renew and expand the 2017 tax cuts. This tax law
change would be a long overdue boost for millions of Americans.

Tips often comprise a substantial portion of the earnings of
waiters and waitresses, as well as of other service-sector
employees. However, unlike regular wages, a service-sector
employee usually has no guarantee of, or legal right to, a tip.
Instead, the amount of a tip usually depends on how well an
employee satisfies his customers. Since the amount of taxes one
pays increases along with the size of tips, taxing tips punishes
workers for doing a superior job!

Many service-sector employees are young people trying to make
money to pay for their education, or single parents struggling to
provide for their children. Making tips tax free gives these
hard-working Americans an immediate pay raise. A person may use
this pay raise to devote more resources to his children's or his
own education, to save for a home or retirement, or to start a
business.

Eliminating taxes on tips will provide some (limited) relief from
the Federal Reserve's inflation tax. This tax results from the
decline in the dollar's purchasing power caused by the Federal
Reserve's monetization of federal debt. The inflation tax is the
worst form of tax because it is hidden. Thus, most people will
not blame the Fed for higher prices. The inflation tax is also
regressive, as price inflation is more of a burden to those at
the lower end of the income scale than to billionaires. The
Fed-created price inflation has forced many Americans to work two
jobs.

This is not to suggest that reducing taxes on tips will fully
compensate working people for the income they lose to the
inflation tax. The best way Congress can help relieve the people
of the inflation tax is to cut federal spending that leads to the
Federal Reserve monetizing debt. Congress should also pass a law
forbidding the Fed from monetizing debt by purchasing federal
debt instruments.

It is also long past time to stop talking about tax cuts
"costing" the government money. Talking about tax cuts in terms
of how much money they cost the government, as opposed to how
much money they leave in the hands of the people, accepts the
premise that the government has a greater moral claim to the
money than those who actually earned it.

In truth, saying cutting taxes cost the government money makes as
much sense as saying stopping a mugger from taking everything in
your wallet "cost" the mugger money. Instead of worrying about
how much tax cuts cost the government, the politicians should
worry about how much welfare and warfare spending cost taxpayers.


The idea that tax cuts should only be supported if they promote
"efficiency" should also be rejected. All tax cuts promote
efficiency because, as economist and Ludwig von Mises Institute
President Thomas DiLorenzo put it, "private individuals always
spend their own money more efficiently than government
bureaucrats do."

Instead of worrying about whether the government can "afford" tax
cuts or whether tax cuts promote economic efficiency, those
concerned about the government deficit should focus their efforts
on reducing government spending.

If the government stopped trying to run our lives and run the
world, there would be no need to punish hard-working Americans by
taxing their tips.
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great American principles of individual liberty, constitutional
government, sound money, free markets, and a constitutional
foreign policy, by means of education, issue advocacy, and
grassroots mobilization.

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