Red Rock Resorts and Culinary Workers Union Local 226, which have been engaged in a decades-long feud, found common ground over presidential campaign pledges that would remove taxes on tipped wages.

The locals casino operator and the state’s largest labor organization agree it would benefit Las Vegas hospitality industry workers.

But that’s where the commonality ends.

Red Rock Resorts executives said last week the tax reduction would provide more money for discretionary consumer spending, which would benefit the casino operator. But Culinary leadership clamped back on the comments, saying Red Rock employees, who lack union contracts, wouldn’t see any benefits from the company’s financial windfall.

The issue percolated long before President-elect Donald Trump mentioned the idea during a June campaign rally at Sunset Park, saying he would call on Congress to end the taxation of tips as president.

Taxes on income for hospitality workers increased by anywhere from 50 percent to 60 percent in 2022, nearly two years after the IRS — the federal agency charged with collecting taxes — lowered the tip allocation rate to compensate for the lack of open hospitality businesses during the thick of the pandemic. The rate defines what workers would be reasonably expected to make from tips — and the IRS then taxes them accordingly.

The new tip allocation rate is higher than it was pre-pandemic, and the Culinary has been decrying that for more than two years. 

Trump first raised the no taxes on tips issue last summer, saying he was inspired by a waitress he met at his non-gaming Trump International Hotel near the Strip. During an August appearance at a Las Vegas Mexican restaurant, he directly pitched the Culinary for support at the ballot box. 

However, the 60,000-member union, which signed a new five-year labor agreement with the Trump property in January, endorsed Democratic Vice President Kamala Harris, who also expressed support for the idea.

During Red Rock’s quarterly conference call two days after the election, an analyst asked executives what effect any election policies would have on the casino operator.

“I think no tax on tips would be a positive for our business,” President Scott Kreeger said.

Red Rock Vice Chairman Lorenzo Fertitta said an economic analysis of removing taxes from tips “could add somewhere in the neighborhood of about $200 million a year to the local economy, which, obviously, we would benefit from.” 

Red Rock, which operates seven Las Vegas-area properties under the Station Casinos brand, has been engaged in a feud with the Culinary, Nevada's largest labor organization, about unionizing most of the company's 13,000-person workforce. 

In June, the National Labor Relations Board ordered three of the company’s Las Vegas casinos to negotiate collective bargaining agreements with employees. But Red Rock is appealing the decision. 

The casino company’s Chief Financial Officer Stephen Cootey said the no taxes on tips policy would save the company $2 million to $3 million per year in payroll taxes. 

However, Culinary Secretary-Treasurer Ted Pappageorge said Wednesday that the company only backs the idea because it improves the company’s bottom line. 

Pappageorge said Red Rock’s seven neighborhood casinos and seven smaller Wildfire properties benefit from five-year contracts the union negotiated with Strip and downtown resorts that included 32 percent salary increases for employees.

“Stations is milking off the great union contracts. Those workers spend their money [at the company’s properties],” Pappageorge said. “The company refuses to pass the money on to their workers. It’s not surprising that they talk about a $200 million windfall.”

Pappageorge said the question is whether Trump can deliver on the no taxes for tips pledge. He said the union supported Harris because she had a plan to address the Subminimum Wage Act, which allows businesses in 34 states — but not Nevada — to pay less than the federal minimum wage for certain categories of workers.

Fertitta and his brother, Frank Fertitta III — Red Rock’s CEO — each donated $9,900 to the Trump campaign in August, according to OpenSecrets.org. 

“There's going to be big pressure for Trump to deliver, and we’ll see if the MAGA bros in Vegas will step up and support their guy,” Pappageorge said. “You can’t just throw dirt on the wall and see if it sticks.”

Alejandro Duhart, a room service server who has worked at Red Rock Resort since 2017, said his tip earnings would be affected because gratuity is automatically added to room service orders.

“People just sign the check,” he said. “Some people are generous so I do see a few cash tips.”

Members of Nevada’s congressional delegation support the no taxes on tips efforts while researchers at the Brookings Institution called it “an answer in search of a question” in an op-ed, saying it could create inequities in the tax code.

Rep. Susie Lee (D-NV) and Rep. Steven Horsford signed on as co-sponsors of the bipartisan No Tax on Tips Act that was introduced in July but has not been acted upon by Congress. 

Rep. Dina Titus (D-NV) said in a text message she doesn’t expect any no taxes on tip issues to come up before Trump is inaugurated Jan. 20. She said she thought the matter might be part of the administration’s tax package that she expects would be submitted before the tax cuts he pushed through in his first term expired.