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National

If you think tipping culture is already out of hand, think about what would happen if workers no longer had to pay taxes on tips — something both Vice President Harris and former President Donald Trump are now proposing.

Why it matters: Typically, ideas like these are tough to turn into reality, but next year when the Trump tax cuts expire, Congress will likely pass some kind of new tax bill.

That creates an opportunity to put new policies in place, says Brendan Duke of the Center for American Progress Action Fund.

The big picture: A no-tax-on-tips policy would incentivize workers to push harder for more tips.

And their employers would be into it, happy to shift the burden of wages onto customers. 

Businesses, then, would have every reason to figure out more ways to push customers to tip.

Where it stands: You can't buy something to eat or drink in these times without getting asked for a gratuity, often by an iPad screen.

"As pervasive as things seem now, I have to imagine that it will only get even more pervasive should this pass," says Ernie Tedeschi, of the Yale Budget Lab, who recently wrote an analysis of the policy. 

The intrigue: Where things start to get wild is outside the restaurant industry, as Americans try to figure out ways to classify more of their income as tips. Think bankers' bonuses or sales commissions — or even pay for a Substack writer or freelance podcaster.

The U.S. tax code already has different rules for different kinds of income — capital gains, for example, are taxed at a lower rate than payroll income.

When those kinds of divides happen, you create enormous incentives for people to game the system, says Howard Gleckman, a senior fellow at the Tax Policy Center.

Those kinds of shenanigans typically happen with higher earners — think of the carried interest tax loophole, for example.

For the record: An official from the Harris campaign said the policy would include "strict requirements to prevent hedge fund managers and lawyers from structuring their compensation in ways to try to take advantage of the policy."

Trump's campaign hasn't offered much in the way of detail.

The bottom line: Knowing that tipped income isn't taxed, people might decide to give a little less money.

"I'm a pretty religious 20% tipper," says Tedeschi, who until recently was chief economist at the White House Council of Economic Advisers. "But, quite frankly if my dentist started asking me for tips, I would be like, 'hell no'."

The bar chart displays the percentage of workers in tipped occupations by federal income tax rate in 2022. 37% did not pay any federal income tax. 11% paid 0-10%, 52% paid 10-20% and 1% paid 20% or more.

Share of tipped workers by federal income tax rate

Data: The Budget Lab; Note: Tipped workers are those in jobs where tips are common, such as waiters, bartenders and hairdressers; Chart: Axios Visuals

Eliminating taxes on tips would not likely have a huge impact on tipped workers. A lot of these workers don't make enough money to owe federal income tax, though estimates vary.

By the numbers: More than a third of tipped workers, including those working in restaurants, barbers and bartenders — didn't pay income tax in 2022, per an analysis of tax data from the Current Population Survey from Ernie Tedeschi, at the Yale Budget Lab.

He didn't account for tax credits, which can give some of these folks a negative tax rate — or lower their tax liability.

A separate analysis from advocacy group One Fair Wage, looked at different government survey data that included self-reported income, narrowed in on restaurant workers and found that two-thirds don't pay income tax.

These proposals would only help a very small slice of workers. Tedeschi estimates that last year roughly 4 million workers were in tipped occupations — 2.5% of all employment.

On top of that, the Harris campaign tells Axios that, if elected, she'd work to craft a proposal that has an income limit — cutting the number of potential beneficiaries even more. 

What a "no taxes on tips" policy could mean for U.S. tipping culture

If you think things are bad now, just wait.

Illustration of a percent sign in the shape of a nervous-looking face with beads of sweat

Wages

Business

Thousands of Democrats will hone in on their party's 2024 election agenda at the Democratic National Convention starting Monday in Chicago. 

Why it matters: The Democratic presidential ticket is already locked in. Now, the party will be expected to provide a clearer platform in what's typically a TV-friendly positive display of unity and energy.

Vice President Kamala Harris and her VP nominee Minnesota Gov. Tim Walz, as is tradition, are expected to be the prime time speakers on the final and penultimate nights of the convention, respectively.

"Democrats will come together to build on our progress, lay out what's at stake in this election, and unite around our shared values of democracy and freedom," the DNC website said.

The convention came together on an unusually truncated timeline, following President Biden's withdrawal from the race in late July and Harris' quick surge to the nomination.

The DNC is being held through Thursday in Chicago.

The event will be live streamed on the convention's website and social media platforms. It's also available via TV device apps and providers.

Inside the room: Primetime programming will be held at the United Center, which also hosted the 1996 DNC. 

Daytime party business will occur at the McCormick Place Convention Center. This will also be the headquarters for Democratic staff and media. 

Harris and Walz are already the nominees. What does that mean? 

Flashback: Harris became the nominee during a virtual roll call in early August after her party immediately coalesced around her following Biden's withdrawal and the announcement of her candidacy.   

Convention chair Minyon Moore certified Harris and  and Walz on the ticket on Aug. 7, after Harris announced Walz as VP pick following a fast vetting process.

Between the lines: While delegates will still host a ceremonial roll call at the convention, the event will largely focus on touting Harris as a candidate.

Delegates had previously been likely to proceed with a virtual roll call to nominate Biden early, controversial especially after his debate against former President Trump, with the intent to use the actual event to talk him up as the candidate. 

By the numbers: 50,000 total visitors are going to the convention, its website said. 

5,000 of those are delegates and alternates.

State of play: Biden is expected to address the convention on its opening night — and largely turn over the rest of it to his successors as the retiring president.

Less than a month ago, he was still the presumptive Democratic presidential nominee and thus would have given the keynote address.

Other prominent Democratic speakers slated in prime-time spots include former Presidents Barack Obama and Bill Clinton and former Secretary of State Hillary Clinton.

Biden's handoff to Harris set for DNC in Chicago

Exclusive: DNC to stream vertically on TikTok, Instagram and YouTube

Poll: Hey, Chicagoans, sound off on the DNC

What to know about the Democratic National Convention

The DNC is being held Aug. 19-22 in Chicago.

Animated illustration of an abstracted political convention crowd, camera flashes, and tall signs with the names of states running vertically down them. One sign spins to reveal the words DEMOCRATIC NATIONAL CONVENTION.

Democratic National Convention

Illustration of an abstracted political convention crowd, camera flashes, and tall signs with the names of states running vertically down them. 

2020 election

Axios Vibes

Elections 2024

Kamala Harris

2024 will be an election year like no other, as President Biden seeks re-election amid economic uncertainty, two wars and questions about his age. His likely foe, former President Trump, faces felony charges and vows revenge on his political enemies. Meanwhile, Americans generally are dissatisfied with those choices and are divided over immigration, race, education and more.

Politics & Policy

Vice President Harris announced on Saturday plans to spend $370 million in digital and television ads for her presidential campaign between Labor Day and Election Day.

Why it matters: This is an initial investment, though representing "historic" levels on air, the campaign said in a news release.

It plans to spend $170 million in TV reservations and $200 million digitally.

What they're saying: "Our coordinated campaign now includes more than 1,600 paid staff and more than 280 offices across the battlegrounds," the Harris campaign said. "This weekend, heading into the Democratic National Convention, we are mobilizing 2,800 events across our key states in order to reach the voters that will decide this election." 

"More than 10,000 supporters signed up for volunteer shifts this weekend alone."

The Harris campaign alleged the Trump team "has reserved virtually no critical ad placements in the battlegrounds" and doesn't have a "meaningful" long-term plan to communicate with voters.

The other side: Steven Cheung, Trump's campaign communications director, called the claims "More lies from the Kamala campaign as they are desperately scrambling because they see what everyone else does." 

"Voters know Kamala is weak, failed, and dangerously liberal, and the Democrat ticket is the most radical in American history," Cheung said in an email to Axios on Saturday.

He also criticized Harris' record in the Harris-Biden administration as "disastrous" and said her newly-announced economic plan "proves she would continue to be a disaster."

The plan includes, in part, a ban on price-gouging groceries, tax cuts for middle-class families and downpayment assistance for first-time homebuyers.

In Raleigh, VP Harris unveils a plan to cut everyday costs

Trump goes big on tax cut promises in Harris prebuttal

Harris campaign plans initial $370 million in ads

That is $170 million in TV reservations and $200 million digitally.

Vice President Kamala Harris speaks on her policy platform at the Hendrick Center For Automotive Excellence on August 16, 2024 in Raleigh, North Carolina. 

Vice President Harris giving a policy speech at the Hendrick Center For Automotive Excellence on Aug. 16, 2024 in Raleigh, North Carolina. Photo: Grant Baldwin/Getty Images

Expect fewer hallways and more nooks that work as "pocket offices" or kid-friendly alcoves in newly built homes.

Why it matters: Builders and architects say they're using every square foot of space as many shrink houses to cut costs.

"All that Tetris we played in the '90s has finally paid off," experts at John Burns Research and Consulting wrote in a recent report surveying industry pros nationwide.

State of play: North Texas-based Cadence Homes is building townhouses under $400,000 with workstations tucked just off the kitchen.

Listed for about $155,000, one of Lennar's brand-new homes in San Antonio, Texas, offers 661 square feet of space — nearly all of which is open concept, except the primary suite and extra bathroom, which are tacked at the ends of each floor.

Reality check: Not everyone is eager to move in.

"Why not just live in an RV at that point? No property taxes," one X user said about a 763-square-foot house, first reported by ResiClub, that Lennar is building in Fort Worth, Texas.

It features two bedrooms that split off from a single hall, for under $200,000.

The big picture: Large homebuilders are churning out smaller houses, partly to attract first-time buyers prioritizing "affordability," D.R. Horton CFO Bill W. Wheat told analysts earlier this year.

By the numbers: The national median new home price held steady at $417,300 in June from a year earlier, Census Bureau data shows.

Compare that with existing home prices, which recently hit a new high of $426,900, per the National Association of Realtors.

The line chart shows the median size of new single-family homes in the U.S. from Q1 1999 (2,019 square feet) to Q1 2024 (2,140 square feet). Home size generally increased from 2009 to 2015, before declining in the years leading up to 2020. The size is now trending lower after a brief increase during the post-COVID building boom.

U.S. median size of new single-family homes

Data: National Association Of Home Builders analysis of Census Bureau data; Note: Homes included are those on which construction has started; Chart: Axios Visuals

Over a third (38%) of U.S. builders say they constructed smaller houses last year, and 26% plan to go even smaller this year, according to the National Association of Home Builders.

The downsizing comes as high interest rates have hiked costs for both buyers and builders.

Flashback: Builders mostly focused on larger houses after the Great Recession, but more starter homes were developed between 2016 and 2020, according to the trade association's chief economist, Robert Dietz.

The size of new single-family homes expanded briefly during the post-COVID construction boom, when people sought more space and interest rates were lower.

What's next: Starter homes might look cramped with tighter kitchens and outdoor spaces, John Burns Research and Consulting found.

The death of hallways: New home builds are like "Tetris"

Expect more "pocket offices" and kid-friendly alcoves.

Illustration of a small house below a pair of hands holding measuring tape.

Real estate

Hill Leaders

Axios Hill Leaders

President Biden will make the defense of democracy and his partnership with Vice President Kamala Harris the central themes of his primetime address at the Democratic National Convention on Monday.

Why it matters: It's all part of a complicated — but quick — handoff to Harris, the successor Biden chose under duress.

Biden will attempt to take credit for strengthening democratic institutions, while simultaneously arguing that someone else is in a better position to preserve them.

But Biden is proud of his presidency, the bills he signed into law and an economy that continues to grow. So are many Democrats.

Sneak peek: Biden's DNC democracy speech

The challenge is to make Biden's speech on his past about Harris' future.

Axios

Saturday's top stories

What a "no taxes on tips" policy could mean for U.S. tipping culture

What to know about the Democratic National Convention

Harris campaign plans initial $370 million in ads

The death of hallways: New home builds are like "Tetris"

Sneak peek: Biden's DNC democracy speech

2024 shocker: Rare agreement over populist promises

Reignited protests on the syllabus for fall semester

Biden's goal: Gaza deal by the end of next week

Mediocre real estate agents are out

Scoop: House members fear DNC violence