Both Vice President Kamala Harris and former President Donald Trump have spoken out in favor of eliminating the federal tax on tips – a rare case of agreement between the two presidential candidates.

But experts say there’s a reason Congress hasn’t made the change yet: It would be complicated and enormously costly for the federal government.

“It’s impossible that there wouldn’t be chaos,” James Hines Jr., a professor of law and economics and research director of the Office of Tax Policy Research at the University of Michigan’s Ross School of Business, told AP.

The Committee for a Responsible Federal Budget, a bipartisan group, estimates that exempting all tips from federal income and payroll taxes would reduce revenues by $150 billion to $250 billion between 2026 and 2035. And it says that amount could increase significantly if policymakers changed behavior and more people declared tips.

Harris and Trump announce plans to abolish tip tax

Both candidates presented their plans in Nevada, a state with one of the highest concentrations of tipped service workers in the country.

During a rally in Las Vegas on Saturday, Harris promoted her proposal to eliminate the tax on tips.

“I promise everyone here: If I am president, we will continue our fight for America’s working families, including by raising the minimum wage and eliminating the tax on tips for service and hospitality workers,” she told the public.

Trump too announced his proposal to exempt tips from federal taxes on June 9 – two months before Harris.

Both the Harris and Trump campaign teams have not yet released details of their proposals, leaving questions about how their plans will be implemented and financed unanswered.

Hines said millions of workers — not just wealthy ones — would seek to change their compensation to include tips, and could even do so legally. For example, a company could create a separate entity that rewards its employees with tips instead of year-end bonuses, he said.

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“There will be taxpayers who will urge their lawyers to classify their wage and salary income as tips,” Hines said. “And some will inevitably succeed because it is impossible to formulate foolproof rules that cover every situation.”

However, proponents argue that eliminating the tip tax would reduce the financial burden on service workers, since many of them rely on tips for their livelihood.

Trump’s Republican supporters also argue that Hines’ concerns are overblown. Darin Miller, a spokesman for Texas Senator Ted Cruz, said the IRS has a precise definition of tips and claimed that reclassifying the wages would be considered fraud.

Currently, tips are considered taxable income, requiring both accurate reporting by employees and enforcement by the Internal Revenue Service (IRS).

4 million US workers receive tips for work

Yale’s Budget Lab, a nonpartisan policy research center, estimates that there will be four million workers in tipped jobs in the United States by 2023. That would be about 2.5% of all workers, including restaurant waiters and beauticians.

But according to the lab, many tipped workers already have a lower income tax burden. In 2022, 37% of tipped workers had incomes so low that they paid no federal income tax at all.

“If you’re concerned about low-income earners, there are much better ways to address this problem, such as expanding the Earned Income Tax Credit or changing tax rates or deductions,” Hines continued.

This story was reported from Los Angeles.