Boost the Schmooze? Trump Wants Tax Dining Deduction Back

April 3, 2020by Marcy Gordon, AP Business Writer
Drinks at the bar of the Trump International Hotel. (Photo by Dan McCue)

WASHINGTON (AP) — It may be an odd gesture at a time of social distancing, but President Donald Trump is leaning into his plea to Congress to restore full tax benefits prized by business for fine dining and schmoozing. Trump is seizing on the pandemic crisis to push for an item on his economic wish list: full tax deductions for business meals in restaurants and for other entertainment expenses.

Tax relief for fine dining and the like clashes with the reality of social separation urged by the government as a critical measure to contain the coronavirus. Restaurants and sports stadiums, with their corporate boxes, sit empty across the country.

But Trump argues that restoring the corporate tax deductions could help shore up the pulverized restaurant industry. It was Trump’s own tax law in 2017, which sliced the tax rate for corporations from 35% to 21%, that reduced or eliminated those same deductions. It was a rare provision that wasn’t business-friendly.

The deductions tend to favor higher-end restaurants, the part of the industry that’s been hardest hit by the economic dislocation. Mass-market eateries and fast food and pizza chains have been more likely to hold things together with takeout and delivery business.

“This is a great time to bring it back,” Trump said of the tax break during a White House briefing Wednesday. “Otherwise a lot of these restaurants are going to have a hard time reopening.”

If the tax relief comes, the president said, it will “open up” the restaurant business, and, “in fact, I think the restaurant business will be actually bigger and better than it is right now.” Trump has repeatedly predicted that the economy will rebound robustly, lifted by consumers’ “great pent-up demand.”

Restoring the dining deduction could help at least the tonier part of the restaurant industry — but down the road and depending on the strength of the recovery and consumer spending, some experts believe.

“Do I think it’s a massive help? I don’t,” said Jonathan Maze, editor-in-chief of Restaurant Business magazine. “In theory, you could see it help as business travel picks backs up. Maybe it gets a few people into restaurants who might not have done so before.”

By far the biggest factor, Maze noted, will be the money that goes into consumers’ pockets, including from direct cash payments from the government. Whether they remain too frightened to go to restaurants is an uncomfortable question.

“While the restaurant industry sorely needs federal assistance, restoring deductibility is an action that should fall further down the priority list,” said Kevin Schimpf, senior manager for industry research at Technomic. “With so many business people and office staff working remotely for the foreseeable future, it’s unlikely this action would have much short-term benefit.”

Congressional leaders haven’t weighed in yet on Trump’s proposal.

Trump’s 2017 tax law, whisked through by the then-Republican majority in Congress, cut the 100% deduction for business meals in half and eliminated it entirely for most entertainment expenses at venues like sporting and cultural events.

From pricey corporate boxes at sports stadiums to Double-A baseball games in small towns, the entertainment deduction was a prized perk for companies. Some companies continued to spend without the tax incentive, seeing the benefits from entertaining as a payoff in future revenue. But the tax change had a bite.

There’s also a psychological effect. When something’s deductible, even in part, people think it’s less expensive; the government, in effect, is picking up part of the cost.

Business

House to Vote on Stand-Alone Small-Business Loan Program Fixes
Congress
House to Vote on Stand-Alone Small-Business Loan Program Fixes

WASHINGTON — The House will vote next week on legislation changing terms of the Paycheck Protection Program that have served as obstacles to some small businesses seeking relief under the forgivable loan program. “We saw a quick fix on how we could make this work better,”... Read More

Groundbreaking Survey Series Asks, 'What Will It Take to Return to Normalcy?'
In The News
Groundbreaking Survey Series Asks, 'What Will It Take to Return to Normalcy?'
May 19, 2020
by Dan McCue

WASHINGTON - Would you be willing to take a cruise right now? How about attending a live sporting event? Or staying in a hotel? Perhaps flying? A new survey of the travel and leisure attitudes of Americans found that more than half would take a cruise,... Read More

The Coronavirus Is Taking A Toll On The Renewable Energy Sector
Energy
The Coronavirus Is Taking A Toll On The Renewable Energy Sector
May 19, 2020
by Gaspard Le Dem

The natural world has gotten a boost from the coronavirus pandemic.  With fewer cars on the roads and planes in the sky, the world has benefited from clearer skies and an unprecedented decline in carbon emissions.  Daily CO2 emissions decreased by 17% between January and early... Read More

Number of Female CEOs in the Fortune 500 Hits All-Time Record
Business
Number of Female CEOs in the Fortune 500 Hits All-Time Record
May 19, 2020
by Dan McCue

The number of women running America's largest corporations has reached a record high with 37 of the companies on this year's Fortune 500 being led by female CEOs, Fortune magazine announced on Monday. The Fortune 500, which ranks America's largest companies, has long been looked to... Read More

Little of the $500 Billion in Relief Fund for Businesses Has Been Spent
Economy
Little of the $500 Billion in Relief Fund for Businesses Has Been Spent

WASHINGTON — The Treasury Department has disbursed less than 8% — just $37.5 billion of $500 billion — of the emergency funds that Congress approved two months ago for loans and loan guarantees to help stabilize the economy, according to a report Monday from a congressional... Read More

Department of Transportation Relaxes Rest Stop Rules For Truck Drivers
Transportation
Department of Transportation Relaxes Rest Stop Rules For Truck Drivers
May 18, 2020
by Gaspard Le Dem

WASHINGTON - The Federal Motor Carrier Safety Administration announced on Thursday that it had finalized new rules to give truckers more flexibility on their driving hours. The announcement comes after two years of intense public debate over how to give truckers more leeway on required rest... Read More

Straight From The Well
scroll top