[DeadMoneyDad]

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There is actually sound economics in this proposal.

There would be a very modest hit on revenue, but a rather large multiplier effect on the economy.

Earned income in the hands of the "working class" is much better overall than money in the hands of the government.

Tuff graduate of econ 101

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Well when you get past the 101 level you learn that no economic activity happens in a class room.....

In the real world the vast majority of tips are now not taxed. The IRS has tried and likely collects more now than it used to collect on as a whole.

But look at the net effect on say the SS earnings for the tip earner. By not reporting on or taxing the tips they are willing to currently report, each individual now no longer gains the benifits of the earnings nor benifits the entire group who think they might get a dime out of SS.

Off the books economys cause many problems for governments and most directly impact the working class more than others. The rich are always going to be able to make some economic decisions with taxes in mind, where as a working man's economic decisions very rarely have positive tax consequences if many choices at all.

So yes in economics 101 money out of the hands of governement is indeed good, because the government is not as effecent as the private sector in it's utilization of the same dollars. But Paul's plan removes an important portion of lower class wage earners income from taxation now as well as removing it from over all SS earnings over their life time. If he was smart he'd suggest fully reporting it for SS earnings or even SS taxes but NOT income taxes.

Your average tip earner isn't pushing up against ever higher tax brackets as it is, many working part time or while in school. The actual tax bite out of their reported tip income is more than likely received as an annual tax refund now. I doubt there is one tip earner who is subject to AMT calculations.

IMPO he looks like a fool on a number of counts, not the least of which is courting a younger and less affluent demographic that is less likely to be registered to vote, and even less likely to vote on election day.


D$D