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URL:  http://boards.fool.com/because-youre-paying-her-to-serve-you-your-food-26519534.aspx

Subject:  Re: Out of Curiosity: On Tipping Date:  3/30/2008  5:25 PM
Author:  TheXRayStyle Number:  99893 of 121061

Because you're paying her to serve you your food, exactly the way you pay a mechanic or anyone else that performs a service.

I'm not sure that it is exactly the same. The difference in this case is that paying a mechanic is compulsory. It is a debt owed. Tipping, on the other hand, is not strictly compulsory. Nor are tips above, say, 20% enforced even through social mores. The fact that there's a voluntary transfer of money on a debt of zero, rather than paying a set price for a service, is what I'm bringing up.

Why I thought of this is that in the discussion in Reservoir Dogs, the point is made that people often give more than is typical to help support working single mothers. Let's say that I pay a $25.00 tip on a $5.00 bill because I know the waitress is a hard working single mother struggling to get by in my neighborhood, when a dollar or two would be typical. This excess contribution above the "fair market value" of the service provided in this case seems roughly the same as a gift in my mind. Of course, the fact that I chose the vehicle by which to transfer that money poorly is my own fault and not that of the IRS. There are countless parallels elsewhere in the world of taxation. I'm simply raising the point that this is an interesting legal nuance (at least to me).

By no means do I disagree with the fact that it is taxable income because the IRS says that it's taxable income. That's indisputable. I have no intentions to and I do not encourage others to use this argument to try to get around taxation. I just think it's an interesting thought experiment.
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