No, they're talking about taking an income classification and taxing it differently.

Which is a difference without a distinction. Some careers earn money through tipping; nearly all others don't. If you make one specific type of income classification tax-free, you're giving a benefit to the specific category of people that are in those jobs and not to others.

There's no transaction involved where the government shifts money from one group to another or creates a scenario where prices rise because of the subsidy.

Neither is there such a transaction with nearly all the Democratic programs that conservatives disdain. The EITC doesn't "shift money form one group to another" - it takes money out of the treasury and gives it to the recipients. Like No Tax on Tips, that money has to come from somewhere, which means that indirectly other people will have to pay more taxes to compensate for the preferential treatment given the benefited group. But there's no practical difference in how it operates.

Prices never rise with a subsidy. Subsidies distort markets by making prices lower than they would otherwise be.