Well, I have not heard any servers on this thread complaining about the IRS calculating more tip income than they actually received. My guess is that's because that is not what is happening. The people 'complaining' mean well but do not have first-hand knowledge of how tips are reported. Let me state again that tips may be calculated differently by different establishments, but it is common knowledge that waiting tables in the U.S. is a well-paying job (considering it requires no formal education and the alternative is working for minimum wage).

Even though servers make a decent amount of money and one non-tipper per night will not destroy a server's earnings, not tipping is the crappy thing to do when it is absolutely the custom of this land.

To me it's simple. Hotel staff make minimum wage or above. Servers make ~1/3 of minimum wage, which is why I tip them while I don't tip hotel staff unless I've made a mess.

(emphasis added)

It's an interesting article, but I'm confused about what is and isn't included in quality of service. From the article:

I read it as saying (and I'd agree) that adapting to personality is a component of quality of service. Of course I don't know anything about it, but I'd also guess that the diner near your house does offer good, although unconventional, service to its clientele. If it truly had poor service, it would be out of business.

This is an over generalization, in California and several other states restaurants are required to pay servers the full minimum wage.

There is so much hostility and anger on this thread...

A 5-second search for "tips" on www.irs.gov reveals this page, among many others:

http://www.irs.gov/taxtopics/tc761.html

It's usually helpful to go to the source when asking such specific questions, rather than asking a nebulous population for anecdotes. The IRS website actually has many "user-friendly" pages that explain certain aspects of the tax code in layman's terms fairly well.

Again, from the IRS website, tips - whether actual or allocated - are included in box 1 of the W-2: "Wages, tips, other compensation."

It is not only legal, it is law - as in, it's not just allowed, it's required. The reason few people complain is that allocated tips are only 8%, while average actual tips are generally much higher... unless, of course, a large fraction of customers decide to stop tipping.

and as per my earlier link to the DoL web-site, federal law also requires employers to ensure that all wait staff are paid at least minimum wage including tips and must make up the difference in cases where they don't.

Of the 50 states in the U.S., only 4 mandate minimum wage at least equal to federal minimum wage ($7.25) for all workers: Alaska, California, Oregon, and Washington (maybe Nevada). In the rest of the states, hourly wages start at $2.13/hour but can be higher.

http://www.dol.gov/whd/state/tipped.htm

So I have to wonder...

...where and when did tipping begin? Did it begin with restaurant waitstaff, bartenders, or elsewhere? Was there a transition period when it seemed like an unsavory bribe - something you weren't sure whether to offer or whether it would be accepted?

Did people originally do it in order to obtain better service? Did they do it because they felt that a labor market was being artificially manipulated by an external power? (e.g., Compassion for workers in some sort of indentured servitude or other forced labor relationship.) Some other reason?

And how does tipping make the leap into new professions? 15 years ago, the thought had never crossed my mind to tip a hotel housekeeper. In my time reading FT, I've now read about the concept but it seems like a minority actually do it. 50 years from now, will we all be tipping housekeepers as a cultural norm?

Understanding the answers to these questions might be important in some countries where tipping seems to be encroaching...

The Singapore government still believes that to be the case and has been at great pains to stamp out the practice in the country.

When I was 18 and in high school, I was a waitress at a Pizza Inn for a few months. Back then, regular minimum wage was $3-something and wait staff minimum wage was $2.09/hr. The regular minimum wage today is way too high, but that's another topic.

I always reported my cash tips. Under-reporting is tax evasion, and I don't do that.

I didn't like working there because the place was so slow. One week, the restaurant had to add money to my paycheck because the $2.09+tips was still less than regular minimum wage.

I hate the tipping culture and wish it would go away, but at the moment we're stuck with it. When I go to a restaurant, I usually tip exactly 15%, or zero if the service is poor. I don't do complicated calculations, and I certainly don't consider the employee's personal tax situation.

I don't know if it's law, but when I worked at Radio Shack for commission, if my commissions didn't add up to minimum wage, the company made up the difference. Too many weeks of making up the difference and you were let go. The alternative was to under-report hours, which I saw frequently.

It's a rant in response to the other responses that are off-topic, as so often happens when the subject of tipping comes up on FT.

On topic; do everything yourself, and you'll not be obliged to tip at all. Cut your own hair, refuse housekeeping and just ask for fresh towels, eat at home or fast food, take no taxis, use no tour guides, handle your own bags, take your own groceries to the car, buy your newspaper from a box and park your own car.

During the times we don't feel like we want to pay tips while dining either we 1) eat at fast food places/joints in a mall food court that don't require waiter/waitress service or 2) eat at home.

I sometimes wish I had that option.