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Article on tipping pre or post-tax from The L.A. Times

Tip suggestions on receipts usually are after-tax, but is that fair?

Even some restaurant owners are surprised to find the recommendation is typically calculated based on the total including tax. That flies in the face of etiquette advice.

August 03, 2010|David Lazarus
Glendale resident Lee Lanselle ate breakfast the other day at the Hill Street Cafe in La Cañada Flintridge. As he waited for his credit card receipt, he worked out the tip in his head.

The receipt arrived and Lanselle was surprised that his estimate of a 15% tip was less than the “suggested gratuity” printed on the form. A closer look revealed that the recommended tip on the receipt included the full amount of the meal, including taxes.

<snip>

Read the rest of the article here:

http://articles.latimes.com/2010/aug/03/business/la-fi-lazarus-20100803

Basically, the article goes on to cite etiquette books as saying that tips should be pre-tax.

I’m probably going to piss off fellow waiters by saying that I understand this sort of thinking. If a tip is clearly tipped on pre-tax (by clearly I mean an “exact” percentage like 15 – 20%), it doesn’t bother me at all. As a matter of fact, years ago, my mom asked me, “Why should I tip on the tax”? I answered, “I don’t know, but it’s not very much difference, and your son is a waiter, so why don’t you just tip on the final amount”? After that, she always tipped on the final total.

Not everyone has a son or daughter who is a tipped employee, so I understand the reluctance in tipping on tax. If you think about it, it doesn’t make a lot of sense, especially for a large bill. However…

…one advantage of tipping on the post-tax total is that it’s a little easier to tip on the final total, since that’s the total that’s reflected on the credit card bill (when paying with a credit card, of course). Also, not every restaurants shows all of the taxes that are paid, because some of the tax is included in the price of alcohol (my restaurant actually breaks it out, but it’s the exception, not the rule). Considering that the tax usually only adds between $.50 – 2.00 to the tip, it seems to me to be easier to simply use the bottom total. Of course, there is self-interest involved, so I can’t claim to be a neutral observer.

There’s another factor as well – believe it or not, I’ve found that the majority of people actually tip on the final total. When the bill is, say $60, generally I’ll get a $12 tip, assuming that the service has been fault-free. Sometimes I’ll get $9 even if the service has been impeccable, because some people only tip 15% regardless of how stellar the service has been. I rarely get $11 or $8.25.  I think that people are just used to looking at the total on the credit card. Obviously, I’m just fine with that. Having said that, it doesn’t bother me when I get one of the latter tips, since people sometimes find a way to “round down” as well. Every waiter knows all too well that if you have a check for $59, sometimes people will tip as if the bill was $50 instead of $60. So, I might get $10, with the guest thinking that they still tipped 20%.

So the waters get muddied if you aren’t tipping on the total amount.

Is that a reason to tip on post-tax? I’m not convinced that it is. However, if you really want your waiter to know the exact percentage that you’re tipping, tipping on the final total is a good way to ensure that, and it usually doesn’t cost that much to insure it.

So…tip pre-tax or post-tax. However, at least try to tip something other than a random amount like, say, 13% of either total (unless of course, you’re trying to send a message that service was sub-standard). Obviously, the amount of tax that your community charges affects this, but rarely does a 13% tip on post-tax equals a 15% tip on pre-tax. Try to make it easy for your server to figure out whether your tip is truly reflective of the service that you’ve received.

I still say that any waiter will very much appreciate the generosity and lack of “saving a few pennies” if you tip on post-tax. It’s a nice thing to do, and don’t we need more of that these days? Besides, it’s positive reinforcement for a job well done.

Finally, in every restaurant that I’ve worked in, any auto-grat is based on pre-tax. That may not be the case in every restaurant.

From "How Stuff Works"

3 responses to “Article on tipping pre or post-tax from The L.A. Times

  1. tipsfortips March 19, 2011 at 2:24 pm

    I actually got into a discussion about this on a local food blog yesterday. I think long before restaurant owners start thinking about whether they calculate the tip before or after tax, they need to make sure their staff is tipping out pre-tax. Most every restaurant calculates tip outs on sales that include tax. I don’t feel bad about people tipping me after tax if I have to tip out after tax.

    When we grat tables at my restaurant it is also pre tax. This means that an 18% grat is actually 16% of the post tax amount. This leads to the debate to grat or not to grat based on whether you can anticipate over 16%.

  2. Nick Boodris March 19, 2011 at 5:44 pm

    This is very good post that addresses this long standing argument on tipping. I live in cook (crook) county Illinois that has the highest taxation in lthe nation on liquor and food among everything else. Most of the time I tip more than 20% even if the waiter is mediocre. I used to tip on the tax but don’t anymore because crook county is gouging everyone including at the gas pump. When I dine, I know my wait staff will be well compensated but I will not tip on the tax because its a personal thing with me and the county.

  3. Joanna Joseph February 22, 2013 at 5:22 pm

    Tip the waiter and not the government — that is my principle. But regardless of what other people believe, save yourself from struggling to figuring out the tip, or worse, have your math wrong, by using “Divvy Up!”. It is a free iPhone app that will calculate pre-tax or post-tax tip easily — whatever your generosity dictates. Look for it on the App Store!

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