Tuesday, January 25, 2011


A tip (also called a gratuity) is a payment made to certain service sector workers in addition to the advertised price of the transaction. The amount of a tip is typically calculated as a percentage of the transaction value before applicable taxes. Such payments and their size are a matter of social custom. Tipping varies among cultures and by service industry. Though by definition a tip is never legally required, and its amount is at the discretion of the person being served, in some circumstances failing to give an adequate tip when one is expected may be considered very miserly, a violation of etiquette, or unethical. In some other cultures or situations, giving a tip is not expected and offering one would be considered condescending or demeaning. In some circumstances (such as tipping government workers), tipping is illegal.

Tipping in Etymology

The word originates from the 16th century verb tip, which meant "to give, hand, pass" and "to tap", possibly being derived from the Low German word tippen, meaning "to tap." The modern German term for a tip is the unrelated Trinkgeld, literally "drink money." The notion of a stock tip is from the same slang, and the expression hot tip, as in a sure winner in a horse race, also comes from the act of tapping. In the old days, during card games, gamblers would have an accomplice in the room. This accomplice would signal the player regarding the contents of an opponent's hand by "tipping the wink" - that is, by "tapping" out a code with his eyelid. The Oxford English Dictionary states that tip is derived from the English thieves' (which may be taken to mean "gambler") slang word tip, meaning "to pass from one to another" (cf. "to give unexpectedly").
The word "tip" is often inaccurately claimed to be an acronym for terms such as "to insure prompt service", "to insure proper service", "to improve performance", and "to insure promptness". However, this etymology contradicts the Oxford English Dictionary and is probably an example of a backronym. Moreover, most of these backronyms incorrectly require the word "insure" instead of the correct "ensure".
Some claim that the origin for this term is a concept from Judaism, in that it was a chiyuv (obligation) for a seller to "tip the scales" in favor of the customer. The Torah says, "Nosen lo girumov (Give to him a tip)." For example, if your customer has asked for three pounds of onions, you should measure out the three pounds plus one extra onion, tipping the scale in his favor.

Circumstances of tipping

In countries where tipping is expected (for example the United States), complicated social rules and etiquette have developed over the exact percentage to tip, and what should and should not be included in this calculation. In other cultures where tipping exists it is more flexible and no specific assumptions of the tip amount exist. Some believe tipping is an attempt by employers to shift the burden of paying wages onto the customer. Many consider the custom antiquated and an unnecessary level of complication for transactions. Others feel the practice is unfair to taxpayers who earn set wages, as many service people do not report 100% of their cash tips to the government. Another objection is that different tips are given for the same amount and quality of restaurant service (for example, a customer pays a larger tip for lobster than a hamburger).
Some establishments pool tips and divide them to include employees who lack customer contact. At some restaurants, agreements among the staff require the servers to tip out members of the support staff (kitchen, bartender, and busser) at the end of their shift; this means that servers pay a certain fixed percentage of their sales (most often a portion less than 15 percent of total sales) to the other staff. Thus when a patron leaves a small tip, it results in the server having to receive less from the tipping pool than other staff.
Tipping is not expected when a fee is explicitly charged for the service. For example, a service charge for all patrons that is automatically added to the tab with no tipping is very common in Brazil, but it's never mandatory to pay this charge. Bribery and corruption are sometimes disguised as tipping. In some places, police officers and other civil servants openly solicit tips, gifts and dubious fees using a variety of local euphemisms. For example, a traffic policeman in Mexico might ask a commuter to buy him a "refresco" (soft drink), while a Nigerian officer might expect "a little something for the weekend."

Tipping in Tax and labor law treatment

In some jurisdictions, tipped workers qualify for a lower statutory minimum wage from the employer, and therefore may supplement deficient pay with tips. For example, the United States Internal Revenue Service (IRS) requires restaurant employers to ensure that the total tip income reported to them during any pay period is at least eight percent of their total receipts for that period. If the reported total is below eight percent, employers must allocate as income the difference between the actual tip income reported and eight percent of gross receipts. Legally, tips should be reported as income for tax purposes by the recipient. A tronc is an arrangement for the pooling and distribution to employees of tips, gratuities and/or service charges in the hotel and catering trade. The person who distributes monies from the tronc is known as the troncmaster. When a tronc exists in the UK, responsibility for operating PAYE on the distribution may lie with the troncmaster rather than the employer. (The word 'tronc' has its origins in the French for collecting box.)

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