it will absolutely affect the wage they are paid, it will be used as a constant excuse to not pay more than the legal minimum (2.13/hr as long as tips are greater than $7.25/hr)... probably used to justify additional tip stealing that happens pretty much everywhere, people will tip less because of it
This is nonsense for most jobs, and it's nonsense here too. Very rarely are any jobs treated on pure merit of good vs bad performance. Ultimately it ends up being mostly the luck of having reasonable management and good opportunities. Reasonable management is very hard to come by in the restaurant industry.
And either way, if you wanted to believe the merit-based approach, you're talking maybe the top 5% of servers anywhere making "good" money. Wage theft in the industry is colossal.
I will be pleasantly surprised if the removal of tax on tips does absolutely anything to move the needle for the bottom 95% of servers.
The restaurant industry has been lobbying for this to further avoid the pressure of raising wages and the complication of reporting taxes — the reasoning is out there in the open.
This is the sort of modern shell game where corporate interests further obscure costs to trick the lower class into thinking it's a good deal. It's akin to the math on maintenance Uber drivers tend to fail to do when they're calculating their wages... they're absolutely getting hosed and most of them don't even understand how.
You can just look this up, it's not a secret. Median total pay, including tips, in the US is $32k for waiters. In France, it's €22k. The UK is £23k. Even factoring in health insurance costs — ~4.5k/year for an Obamacare plan — waiters make more in America.
Waiters in the US make significantly more than their British and French counterparts, due to tipping: the US minimum wage is lower than the British and French minimum wages, and despite American waiters being paid at an even lower hourly rate than the US minimum wage, they end up making more due to tips, performing the same job.
The upper 25% of waiters in the US make over $40k a year. Your 95% estimate is very off base.
