LAS VEGAS — Nevada’s 3rd Congressional District, a district President Donald Trump won in 2024 where tourism fuels the economy and tips create livelihoods, is perhaps one of the best places for a Republican to run on their party’s no-tax-on-tips legislation.
With just a few weeks left until Election Day, the race seems to have shifted in Democrats’ favor. Rep. Susie Lee, the Democratic incumbent, is running in Nevada’s most competitive House district against Republican opponent Marty O’Donnell by making the case that while she supports no tax on tips, the rest of the provisions in Republicans’ 2025 reconciliation bill, which put the policy in effect, have translated to pain for constituents.
“When people are feeling the pressure economically, the first thing they drop off of their list of things they’re going to do is their trip to Las Vegas,” Lee said in an interview with The Washington Sun before a community event. “That has ripple effects in our economy, because then our servers get less shifts, less tips. … Our small businesses feel the impact too because their patrons are tightening their belts as well.”
Lee acknowledges that the policy has benefited her constituents. But she’d like to make it permanent and accessible to more people.
Trending
No taxes on tips reduces federal income tax up to $25,000 per year for workers who regularly receive tips, and it is set to expire at the end of 2028. It was expected to be a popular provision for Republicans to run on during the midterms. Both former Vice President Kamala Harris and Trump campaigned on eliminating taxes on tips in 2024, and it has bipartisan support.
Like much of the rest of the country, bigger economic factors are hitting this district. Last year, Las Vegas counted its lowest annual total visitors since 2021. Canadians, who make up the largest group of international travelers to Las Vegas, reduced their visits by about 17% last year as tensions over tariffs between the U.S. and Canada escalated. A “K-shaped” economy is also leading to top earners prospering as lower income households struggle to make ends meet.
“Every month I struggle to make the payments, and it’s really hard for me as a mother,” Patricia Soto, a longtime Culinary Union member, said after handing out materials in support of Lee and other Democrats on the ballot in a neighborhood in Las Vegas. “We try everything that we can. So, for me, it’s very bad right now. Very, very bad. We need a change. We really need a change about that.”
Given those broader trends, Republicans are struggling to frame the reconciliation bill around popular policies like no taxes on tips.
“That’s been the Republicans’ biggest problem is messaging and better explaining to the common man what it is that these things do, the policies that they’re trying to enact,” Nate Poort, who works as a roadie in the entertainment industry, said at a Nevada Republican Club lunch in Las Vegas.
O’Donnell, who wrote music for the video game Halo and has never held elected office, is leaning into the policy and is not worried that the rest of the reconciliation package, whose popularity has remained low, will eclipse it. He has two more weeks to see if it can help his party flip the seat, even as a super PAC affiliated with MAGA Inc. has reportedly pulled back $1 million it planned to spend on his behalf.
The cuts to Medicaid and SNAP benefits tucked into the tax bill are efforts by Republicans to reduce federal spending, he argues, and the no-tax-on-tips provision has a bipartisan appeal in an economy where people want to be able to afford homes and basic costs.
O’Donnell’s philosophy is that most people live what he calls “conservative” lives.
“They get up in the morning, they go to work, they’re trying to purchase a home or they have a home, and they’re trying to educate their kids, and they’re responsible. Things like no tax on tips, no tax on overtime, no tax on Social Security actually has an impact on their lives,” O’Donnell told The Sun. “I think that’s the way most people live, regardless of what their political affiliation is.”
A new Politico poll found that tax cuts on tips and overtime pay was a top tax issue for voters but less important to them than increasing taxes for billionaires or ending tax breaks for large companies.
How persuasive no taxes on tips will ultimately be in the 3rd Congressional District is up to how each party frames no tax on tips and the reconciliation package it’s tucked into, said Amy Tarkanian, a former chair of the Nevada Republican Party.
“The way that he’s relaying this message, it is in lockstep with President Trump,” she said of O’Donnell. “I think that’s what you’re probably seeing across the nation.”
Tarkanian added that she doesn’t think many voters know the provision is temporary.
“They just hear it. It sounds great. It sounds uplifting. It sounds promising, and you’re locked in, right?” Tarkanian said. “But maybe you don’t understand the nuts and bolts.”
Tarkanian said that if Lee can successfully explain the nuances of why she didn’t support this version of no taxes on tips, “that puts her in a much stronger position.”
Lee’s challenge is to explain why she voted down the reconciliation package that included the no-tax-on-tips provision, which the lawmaker doesn’t see as an insurmountable hurdle.
“When people look at the equity and what happened in that bill, they can understand why I voted against it,” Lee told The Sun.
Author
