We have about an 8% to 9.5% tax on food in my area (some places have a 'local' tax on top of the state taxes... sigh), so one of the easiest ways to calculate right tip is to double the tax! (and I either round up or down depending on quality of service, because I find it easier to balance whole numbers. )
I very seldom get service so bad that I don't want to tip at all, but for really poor service I will take it down to 5-10% That way their taxes are covered (see comments above and below re this) but they don't get any extra $$. I agree with all that has been said above about the tipping of housekeeping (you can also leave it on a pillow), if someone helps move your luggage, and hairstylists, manicurists, etc. You also would do it with cab drivers, tour group leaders, etc.
I agree that it would be a better option to have everyone paid a living wage/not have to tip... but at least this way one DOES have the option of paying a really nice tip for exceptional service.... and a minimal one to 'reward' substandard service. It's not ideal, but little is on this fallen planet!!!!
AND I make it a point to tell someone who has done an exceptional job that I will be letting their supervisor know what they have done RIGHT and I follow through on that. And when my mother-in-law was still well enough to go out, she was an absolute terror for any food servers... nothing was ever right, the food always was returned, etc. I would make it a habit to 'go to the restroom' and station myself in an unobtrusive corner and gesture the wait person over to me (where MIL couldn't see me) and apologize for her behavior, let them know how impressed I was with how the person was handling her, point out that we got to take her home, and would not leave her behind for them (which always made them smile and sometimes giggle), and slip them a small additional tip if I could afford it -- or tell them I wished I could if I couldn't. I know it made a huge difference for the people.
And as someone who worked as an employment counselor... it's pretty common for wait staff to be paid the minimum wage plus a share in tips --- which means that if you lower your tip because of a bad worker, ALL the workers get penalized. Truly not fair, and I am not sure it is legal... but it is what happens. AND many employers in my state (and perhaps it is required? consistent throughout the country?) are REQUIRED to withhold a percentage of the employees' wages for taxes... and so if you don't tip, they really get hit 2x.... Just something to keep in mind.
NOT an easy minefield to navigate, is it Souljah?