If you have a compelling reason to believe that "income should all be taxed the same", I'd like to hear it. An easily solvable loophole is not compelling.
The notion of having graduated rates is also from an era when the government operated very differently.
Once upon a time, quite a long time ago, most government spending was public services, e.g. roads and constables and teachers. Government assistance was not a major expenditure. Maybe they would have operated a homeless shelter but there were no food stamps, no social security, no EITC. Then you were faced with the government needing to pay the constable but if you took the money from someone who was already close to starvation, they would starve, so the proposal comes to take more of the money from doctors and lawyers. Okay, sure, so make the marginal rates lower on the poor then. Progressive rate structure.
Then we added food stamps and all the rest of it. Now, most of these programs would be better as cash, but either way they have phase outs so you're not giving food stamps to Jeff Bezos. Except that phase outs and marginal tax rates are really the same thing. So we built a whole complicated system to impose lower marginal tax rates on lower income people, and then a separate whole complicated system to impose means testing and phase outs for government benefits, and these systems cancel out because one of them lowers the marginal tax rate of lower income people and the other one raises it.
This is dumb. Get rid of both complicated systems, make the benefits simple unconditional cash and then use a uniform tax rate.
I don't see how this is easily solvable. Whatever tipping cap you introduce will get maxed out, even in situations where tipping didn't use to be the norm. Zero tax is a lot less than any finite tax.
Also, even if you close the loophole in the law, enforcing it is a nightmare, since the tax office needs to process every single tip now, otherwise someone could slip a few thousand dollar tips through the gaps in enforcement.
