'Tipsville USA: big apple instructions on how to tip' blog discussion

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.
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  • mkaibear
    mkaibear Posts: 162
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    Don't forget that in large chunks of the USA the waiter pays tax on his tips at a notional rate of 15% of the bill.

    As in they are taxed as if they had received a 15% tip, even if they receive nothing at all.

    If you tip less than 15% you are in effect taking money out of the waiter's pocket.
  • psdie
    psdie Posts: 126 Forumite
    A recent related thread: Who gets the tip?
  • Hubcaps
    Hubcaps Posts: 16 Forumite
    I live in the US and my general tipping rule is "double the tax and round it up or down" depending on the service (which overall tends to be very good).
  • teeb
    teeb Posts: 392 Forumite
    Also remember that in some parts of the USA, waiters are legally paid less than the minimum wage, because it's assumed they will make money in tips.

    So leaving no tip at all, whilst seeming okay to us Brits, is sometimes a bit of a shame if the food was bad but the service good.
  • jonthedog
    jonthedog Posts: 95
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    edited 7 July 2010 at 12:22PM
    mkaibear wrote: »
    If you tip less than 15% you are in effect taking money out of the waiter's pocket.
    @mkaibear
    You make it sound as if you are stealing money from the waiter! All this means is that the 'value' of your tip is reduced by the difference in the additional tax they would pay. So, assuming the waiter is taxed at ~20%, for a $100 meal your 10% $10 tip would only be worth ~9% on the basis that they've already been taxed $1 on the $5 difference from a 15% tip. The solution would be just to pay an extra 1% to compensate for this, not to bump it up to 15%. No idea what tax rates are in the US, but if it's anything like in the UK the effective tax rates a waiter pays (especially a part time one) would be considerably less than this, maybe 10% when you include allowances, which would reduce the amount of compensation you have to pay to negate the tax to around 0.5% of the cost of the meal, so probably not even worth considering when you round things up.
    In fact, if you take the view that the waiter is probably not going to bother officially declaring the 'extra amount' received on tips above the 15% amount, why should you effectively subsidise those people who have given a 'partially tax free' tip over 15%? It all balances out in the end.
    A point to note is that this is similar in the UK...if a waiter doesn't let HMRC know the actual value of tips taken at the end of the year (or if that amount is suspiciously low), then HRMC will estimate it at the fairly reasonable 10% (based on total restaurant turnover, no. of wait staff, hours worked, etc). I think it is fair enough to get taxed on this basis...if you are so poor a waiter as to not even get 10% on average you don't deserve to be in the job!
  • jonthedog
    jonthedog Posts: 95
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    edited 7 July 2010 at 11:53AM
    teeb wrote: »
    Also remember that in some parts of the USA, waiters are legally paid less than the minimum wage, because it's assumed they will make money in tips.

    So leaving no tip at all, whilst seeming okay to us Brits, is sometimes a bit of a shame if the food was bad but the service good.


    :( Please don't think that you should reduce your tip in the UK if the food is bad; you are legally entitled to leave as much as you think the food is worth (as long as you pay a token amount) and leave a full tip.:)
  • jockosjungle
    jockosjungle Posts: 759
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    Don't agree with the 15% rule at all. The tip for the server should be on service alone and in no way should be tied to the cost of the meal. Is it fair that if you eat in an expensive restaurant in NYC and the bill is $100 that the server gets $15, whereas if you eat in a small diner where the service is friendly and excellent but the meal costs you $20 that that server gets $3?

    The posters above say you are taking money out of the servers pocket by tipping less than 15% however, remember that if its an pricey place and the server has six or seven tables, they can easily be clearing $100 an hour in tips.

    I operate a fairer system, where a waitress in a cheaper restaurant may get about 25% tip and the higher the price the less % they get (but more overall).

    When I first went to the States, 10% was considered the normal tipping amount, not sure where 20% came from.

    R
  • torbrex
    torbrex Posts: 71,340
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    I go to America every year and I have always based my tips on a combination of how good the food was and how well the server treated me, nothing at all to do with how much the food costs and as I am totally hopeless at working out percentages, I give what I think is right.

    As I seldom (if ever) go to the same place more than once the tip (To Improve Performance) becomes irrelevant as I will not benifit from the improved service.

    I also work on the principal that the servers are paid by their employers to do a specific job much the same way as I am and unless they do more than is expected of them the tip is money for nothing.
    In all my working life (35 years) I have never been tipped for 'doing my job'.
  • ratkarth
    ratkarth Posts: 512 Forumite
    Hubcaps wrote: »
    I live in the US and my general tipping rule is "double the tax and round it up or down" depending on the service (which overall tends to be very good).
    i do the same
    double tax
  • lanavdt
    lanavdt Posts: 158 Forumite
    torbrex wrote: »
    In all my working life (35 years) I have never been tipped for 'doing my job'.


    You've never had a bonus in your 35 years of employment?
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