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Representative Darin LaHood

Representing the 18th District of Illinois

U.S. Rep. Darin LaHood picks up tips for tip-tax bill

October 11, 2018
In The News

PEORIA — U.S. Rep. Darin LaHood received some tips while at the Five Senses Salon near the Shoppes at Grand Prairie on Wednesday that could help him pass national legislation that could affect the hair care and beauty industry.

The information he received came from area owners who want the salon industry to have the same opportunities that the federal government bestows on the restaurant industry when it comes to tips received by employees.

The legislation LaHood, R-Peoria, introduced in September with Rep. Suzan DelBene, D-Wash., would extend the federal tax tip credit — now available in the food service industry — to beauty and barber shops where tipping is also customary.

“Extending the tax tip credit should reduce tax burdens and improve reporting of tip income, as it did in the food and beverage industry,” he said.

This wasn’t LaHood’s first trip to the Peoria salon/spa owned by Paola Hinton. He visited in March to meet with Five Senses staff when Hinton provided each of her employees a $500 bonus following changes in federal tax policy that went into effect this year.

This time around, Hinton told LaHood that, without the tax credit, salon owners must pay taxes on tips received by employees. That’s money that could be put back into the business or used to hire more people, she said.

“There’s a cost related to this on the federal government side, but we need to help small business,” said LaHood. More than 80 percent of the 1.2 million beauty industry businesses in the United States employ fewer than 10 employees, predominantly owned and operated by women and minorities.

Hinton presented LaHood with some numbers during his visit, pointing out that workers at four employers — Five Senses, Great Clips (28 outlets), Soderstrom Skin Institute and Capellis Studio & Spa in Decatur — received $1.7 million in tips in 2017. “The cost for the four employers was approximately $195,000,” she said, referring to the tax bill employers paid on those tips.

Hinton has been aware of the tip issue in her industry since 2013, when she attended a Professional Beauty Association conference.

She raised another point with LaHood. “The restaurant industry pays less than the minimum wage (for servers). We (in the salon industry) don’t pay less than the minimum wage,” said Hinton.

In addition to the employers listed above, other operators attending the LaHood roundtable included Denise Geske of the Fox & Hounds Day Spa in Bloomington and Gary Erwin of First Edition, a no-tips salon in Bloomington.

“The overarching concern for me is fairness,” said Erwin, pointing out that, even though his salon is not involved in paying tax on tips, the beauty industry should be accorded the same privileges extended to the restaurant industry.

LaHood said work to get tip-tax legislation passed has just started. “We need to get people engaged on the issue. Then we’ll hold a hearing,” said the member of the House Ways & Means Committee.

“I’m grateful that Congressman LaHood listened, but we can’t stop now,” said Hinton, who has agreed to testify if a hearing is set. “Just tell me when and where,” she said.

Steve Tarter covers city and county government for the Journal Star. He can be reached at 686-3260 or starter@pjstar.com. Follow him at Twitter@SteveTarter and facebook.com/tartersource.