Rep. Pramila Jayapal: Trump's Scam Hidden in Plain Sight

Newsweek

4 days ago

Advocates for ideas and draws conclusions based on the interpretation of facts and data.
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
When President Donald Trump signed his tax and spending legislation into law on the Fourth of July, he ushered in multiple devastating policies that scam and rip off working people.
You've probably heard a decent amount about these different assaults on poor and working families. You've likely seen that at its core, this law gifts billionaires their largest-ever tax break and pays for it by ripping health care away from millions of people, taking food out of the mouths of hungry kids, shutting down rural hospitals, and raising energy prices.
But what you might not know is that tucked away in this bill is a new scam. A scam that takes a promise Donald Trump made on the campaign trail and turns it into yet another way that Trump and Republicans betray people living paycheck-to-paycheck.
Representative Pramila Jayapal (D-Wash.) speaks during Care advocates' 24-hour vigil at U.S. Capitol to share stories and urge lawmakers to protect Medicaid on May 7, 2025, in Washington, D.C.
Representative Pramila Jayapal (D-Wash.) speaks during Care advocates' 24-hour vigil at U.S. Capitol to share stories and urge lawmakers to protect Medicaid on May 7, 2025, in Washington, D.C.for Caring Across Generations
For months, Trump told folks that his bill—which, again, pays for permanent massive tax breaks for the wealthiest few by cutting programs vital to poor and working people—would be a win for working people because of his "no tax on tips" campaign promise.
The opposite is true. Any fringe benefits for workers from these minimal tax exemptions are starkly outweighed by the massive cuts to crucial programs these same workers rely on to survive and make ends meet.
The idea of exempting tips from federal taxes was first thrown out by Trump at a rally in Las Vegas. It ended up becoming a central message of his 2024 candidacy to address people's fury around a federal minimum wage that has stayed at $7.25 since 2009, even as the rich get richer.
Trump's promise to exempt taxes that tipped workers pay may sound good, but a look under the hood of the Republican tax law reveals a big betrayal and little benefit to the millions of Americans working for tips.
First, let's remember that as many as two-thirds of tipped workers—particularly those in lower-wage brackets—already have low enough incomes that they pay little to no federal income tax, even with tips. So they would have zero or minimal benefit from Trump's new law.
Second, Republicans capped the deduction in the new law to $25,000. Considering the $2.13 per hour base minimum pay that many tipped workers make, that cap is woefully insufficient, even if you do file federal income taxes.
Third, some analyses suggest that excluding tips from taxation could even negatively affect low-income tipped workers by reducing their eligibility for tax credits like the Earned Income Tax Credit (EITC) or Child Tax Credit (CTC), which are based on earned income.
Fourth, the "no tax on tips" portion of the new law purposely expires in 2028, after the next mid-term and general elections. Unlike the tax cuts for the wealthiest, which are all permanent. This shows just how empty and cynical this crumb for workers really is.
A recently released expert analysis found that the bottom 20 percent of all earners would see their annual after-tax incomes fall on average by about $560 within the next decade, while those at the top would see more than $118,000 in gains for people making over $3 million.
The real issue here is a completely stagnant and inadequate federal minimum wage and tipped minimum wage.
Today, a person who works a full 40-hour work week and earns the federal minimum wage of $7.25 per hour would make the outrageously low amount of approximately $14,000 a year. For tipped minimum wage workers, the amount is even lower.
Meanwhile, in my home city of Seattle, the minimum wage was raised to $20.76 per hour this year. And that's for all workers—no more exemptions for tipped workers.
Contrary to the doom-and-gloom predictions of those who fought against raising the wage, our economy has grown year after year, and we remain a desirable place for workers and employers.
It certainly hasn't solved every problem. We need to address the affordability of housing and child care in particular, but our stronger wages have been an essential part of workers sharing in the prosperity of some of our incredibly successful companies.
If Donald Trump and his Republican Party actually want to help poor and working folks, we have the proposals to do it. We can pass the Raise the Wage Act, as House Democrats have done multiple years in a row. We can invest in affordable housing and provide universal child care. Instead of ripping away health care from 17 million Americans, we can actually create a universal health care system that puts people over profits.
The latest law does none of the above, and the poor and working people whom Trump made massive promises to are the folks who will be hurt the most.
Representative Pramila Jayapal is a congresswoman from Washington and the head of the Congressional Progressive Caucus.
The views expressed in this article are the writer's own.