Uber and DoorDash Hope to Hitch Ride With GOP Tip Law
President Donald Trump wants to remove taxes on workers’ tips.
Republican lawmakers want to turn that campaign trail proposal into concrete legislation.
And Uber and DoorDash, The Wall Street Journal (WSJ) reported Saturday (March 29), want this legislation to cover the independent contractors that work for them making deliveries and driving ride-share vehicles.
According to the report, legislation proposed by Sen. Ted Cruz, R-Texas, and Rep. Vern Buchanan, R-Fla., would cover restaurant and casino workers. But the people who work for companies like Uber would not be covered.
Javi Correoso, Uber’s head of federal affairs, told WSJ the company was banking on lawmakers’ familiarity with its platform to get their drivers’ tips placed into the legislation.
“We’ve become a major component of how consumers tip,” Correoso said. “If Congress is going to move in the direction of prioritizing this no-tax-on-tips concept, we’re engaged in asking lawmakers to support Uber drivers and UberEats couriers as a fairness issue.”
“It’s critical that any federal legislation also include Dashers,” added Max Rettig, DoorDash’s global head of public policy. “Tips are tips — there’s no reason to exclude Dashers based on how they work.”
The Cruz-Buchanan proposal would limit the tax break to a $25,000 income-tax deduction, and would deny the break to anyone making more than $160,000 per year. In addition — and critical for Uber and DoorDash — the legislation would tie eligibility to reports by employers that break out tips and wages.
Trump had proposed his “no tax on tips” idea in June when campaigning in Nevada, home to a significant population of hospitality workers. Vice President Kamala Harris, Trump’s Democratic opponent, also supported a similar proposal.
The WSJ noted tax experts have criticized the idea, saying it would lead to inequality with other lower-wage workers who don’t get tipped.
Writing about the no-tax-on-tips idea last year, PYMNTS noted that the move could continue to hasten the shift to digital payouts.
“Any change in tax mandates will move stakeholders to reexamine the burdens of collecting and accounting for cash payments and income reporting tied to that cash,” that report said.
“The continued burdens of lugging the cash to the bank to be deposited in the bank are one key point of friction that staffers and employers would like to sidestep. In addition, the psychological impact of getting more money into one’s pocket (because it’s untaxed) will likely boost digital payouts as well, especially instant payouts.”
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