It is both. Tips are taxable income. Whether they are declared is for the IRS to investigate. I certainly won't tip or might leave something very low to show disgust over poor service. But that's quite rare. If waiters, for example, do their jobs or even deliver better service than just average, you have to tip here in the US.

AFAIK, only in North America are taxes calculated on presumed tips.

And it is important to remember that taxes ARE calculated on presumed tips, at least in restaurants and bars.

Some of you might not think that it's necessary to tip, but it is actually expected, not just by the waiter or bartender, but by the US government.

The servers and bartenders are expected to declare tips, based on their sales, WHETHER OR NOT YOU TIP them. Depending on the situation, it's at least 8% of sales, but in many cases, it's expcected that the tip will be the average of what credit card tips (the only ones that can be verified) are. The IRS has gotten a lot more careful in how they look at tipped employees, and most now declare most or all of what they make. And with credit cards becoming the vast majority of sales in restaurants and more and more bars, tipped emplyees must actually declare all of their tips.

Whether or not you actually tip them, they will have to declare that you did, and pay taxes on it. That comes to about 1/3 of what you should have tipped, but didn't.

So, please understand that if you use the services of the waiter or bartender and don't tip them, that you are actually COSTING them money. Is that fair?

As for complaining that it's not fair that you have to pay for their salary because they're underpaid, that may be true. But the savings comes out of the price of food and drinks. In Europe tips are generally not expected in restauarnts and bars. But the servers and bartenders get a LOT more in wages than they do here. That extra cost is passed on to the customer in the form of higher prices for food and drinks. If the US were to switch to not tipping servers and bartenders, prices would go up dramatically on food and drinks because the businesses would suddenly have much higher payrolls to cover -- and not just for servers and bartenders. Bussers, barbacks, food runners and others often don't get full minimum wage either. All of their increased wages would go into the prices of the food and drinks.

Waiters in most US states make less than $3 per hour. That's significantly lower than the minimum wage. That's because it is expected by the government that they will make tips to augment that salary.

For better or for worse, tipping is not optional, unless the service was truly poor. Well, unless you're a complete jerk and don't mind that the bartender or waiter is effectively paying YOU for serving them.

Actually, you're incorrect.

It is expected by the US government that tips are the majority of one's wages. That is why tipped employees are generally not paid the legally required minimum wage. It is expected that the customer's tips will make up the difference.

Waiters make 2.63 per hour in most states in the US, which is less than a third of the mimimum wage. Could you live on $105 per week? No, which is why the minimum wage is so much higher.

In fact, few waiters even see a paycheck, because our wages don't even cover our taxes and insurance. I have to pay several thousand dollars per year in taxes beyond my paycheck. (I actually just figured out my taxes for this year yeasterday!)

Knowing this to be true, I will sometimes watch my wait-person circulate, figure out how many tables he/she is handling and how quickly they're turning, and tip my share of a $20 or $25/hour gross wage. I figure if a waiter clears $150 a shift and works five days per week, that's a passable wage... more obviously in a higher-end place with more skilled service. But if I have run up a $75 tab in a place where the waiter is working six tables and they're all turning every 90 minutes, I might go a little lower. If I've run up the same tab in a place where she's working one or two tables only, I might go a little higher.

Tipping hawks and overseas visitors who withhold tips obviously have never lived within our system themselves.

IIRC and I'll say its been a few years since I was doing taxes for others but I believe you can get around that 8% rule if you can prove that you did not receive any tips or something less than 8%.

if you work at a place that does not allow tipping and you can prove it, you do not pay taxes on those wages

You cannot be serious??? I'm OF COURSE using the services of the restaurant(or whatever) is providing not the WAITER! In civilized countries this sort of thing is illegal. In civilized countries the government forces the restaurants to show consumers the ACTUAL full price of the meal. It OF COURSE includes taking the order and bringing it to you...

Not my problem US law is ....ed up.
However, if there is a law stating that I HAVE TO give tip, then of course I'm not going to break it. I'll just tip the minimum required by law. Please show me that government law.

I really don't care at all if the waiter is loosing money because if I don't tip. Again, not my problem.
The waiter can choose another job if she doesn't like it. And if she is being rude due to not tipping, I know not to visit that particular joint anymore. Easy:p

I guess no need to link the "I don't believe in tipping" video? :D

Nobody claimed there was a law, but simply that categorically refusing to tip waiters in this country is a jerk move. They're effectively independent contractors, paying restaurants for the privilege of waiting tables which (hopefully) will garner them enough tips to add up to a living wage. Similar to your "if they don't like the job they should quit" argument -- if you don't like the system here, you're more than welcome to not eat in restaurants (or stick to Mickey D's).

Oh, welcome to FT.

I agree fully.

You may not like the system we have here, you may dispute the legality of putting only part of the price of the meal on the menu, you may feel the system should change.

All valid points, but the fact remains that if you stiff someone whose livlihood depends on tips, you can't complain when people call you a big jerk. If I were to witness such behavior, in the US, I would indeed call that person a big jerk to their face.

I often host visitors from Europe and I impress upon them the necessity of leaving a decent tip in situations where it is customary and expected. Similarly, I don't go to Europe or Australia or wherever and complain, to all within earshot, how their society could be improved by becoming more like the US.

It would make things more comfortable for everyone if tips did not form such a crucial part of the wage of waiter/waitress. They will be able to safely predict their earnings over a period affording them stability.
I often wonder why Americans cling so fiercely to the tipping culture, and why a more socially responsible system is not in place. Can anyone enlighten me?

I wouldn't say Americans fiercely defend the tips system so much as don't think about it all that much -- it's just the way it's been for most of our lives (just like driving on the right-hand side of the road and predominantly using dollar bills instead of coins). Of course, there's no law prohibiting someone from starting up a "socially responsible" restaurant that promises to pay servers a living wage and full benefits in exchange for disallowing tips (fast food sort of does this, except for the living wage and benefits thing), but the current system has a lot of inertia.

Because when our friends in the land of the free and the home of the brave encounter a frase like "more socially responsible system", many chose to hear "communist"? ;)

(Hey guys, we love you and your wonderfully large and diverse country anyway, we just think you are a little weird when it comes to tipping, guns, and the political obsession with reproductive matters! :D)

I don't care what the US government thinks or expects in this area. If these "independent contractors" don't like the rules or the wages then it is time to move on to a better job more in line with their capabilities and expectations.

I would be happy to see all tipping banned by law, and a livable wage paid to those workers instead. Not all waiters make $2.13 an hour. I believe in California they are still subject to the CA minimum wage law, which is higher than the Federal minimum wage.

Instead of being utopian, if you really feel that strongly, stop going out to restaurants. It seems odd to be against a type of work environment but then patronize that type of business.

I think the underlying notion is that good service deserves recognition, if you remove the incentive (the tips) from otherwise low paying jobs, then service will suffer. In terms of the business owner it's a no-brainer, why not let the public supplement your staffs' wages? Mind you, I don't necessarily think the rationale holds up, service in Japan is almost always uniformly excellent and tipping is non-existent.

At the end of the day it's a cultural/societal norm, the merits of which are debatable. I think this is a situation where common sense should prevail, even if you find the practice objectionable bite the bullet during your travels and do like the locals.