In a rare display of agreement amidst the highly divisive US presidential campaign, both Republican candidate Donald Trump and Democratic opponent Kamala Harris have voiced support for exempting workers' tips from taxation. The proposal, aimed at gaining the attention of service industry workers who heavily rely on tips, has gained traction in Nevada, a key battleground state with a significant workforce employed in restaurants and hotels.

Trump first announced his support for the idea during a rally in June, after being approached by a waitress who expressed concerns over her tax burden. Republicans, known for their stance on lower taxes, have made this part of their official party platform, with several bills currently making their way through Congress, backed by influential restaurant lobby groups.

Following suit over the weekend, Harris threw her support behind the plan, prompting the Trump campaign to label her as "Copy Cat Kamala." The endorsement by both candidates underscores the importance of securing the votes of millions of workers in service industries such as restaurants, bars, salons, taxis, and more, where tips often constitute a significant portion of their income.

According to estimates from Yale University's Budget Lab, around 4 million workers regularly receive tips, which accounts for less than 3% of the overall national workforce. Intriguingly, analysis by the same research group found that approximately 37% of these workers currently earn so little that they are exempt from paying federal income taxes.

Currently, under existing laws, employees are required to report tips exceeding $20 per month to their employers. The federal government collects a share of this income through income and payroll taxes, which helps fund programs like Social Security. In the fiscal year 2018, Americans reported approximately $38 billion in tip income, with an average of just over $6,000 per taxpayer.

While eliminating taxation on tips sounds appealing politically, some analysts caution against its potential negative consequences. They argue that it would unfairly shift the tax burden onto workers who do not receive tips and may inadvertently encourage tipping to expand to new professions, leading to a greater financial impact. Critics also point out that cutting taxes on tips could primarily benefit employers, drawing attention away from the larger issue of businesses not being obligated to pay minimum wage to tipped staff.

The financial implications of this proposal remain uncertain, with various estimates suggesting the cost could exceed $107 billion over a decade. However, the candidates themselves have been vague about the specific details of their plans.

As electronic payments increasingly allow for easier traceability of tips, the risk of under-reporting or failing to report tip income has become a pressing concern. The non-taxation of workers' tips has emerged as a niche but impactful issue in this year's presidential election, prompting both candidates to address its significance to workers in the service industry.

While analysts debate the feasibility and potential repercussions of this proposal, one thing is clear: in an election filled with contentious disputes, Trump and Harris find themselves, albeit briefly, on the same side of the debate surrounding the taxation of workers' tips.