The $ 900 billion stimulus bill passed by Congress Monday night includes a provision that has outraged some lawmakers and taxpayers: a tax break for business meals. Senator Bernie Sanders, a Vermont independent, called the deduction “corporate socialism for the rich,” which would allow CEOs to write off a “3-martini lunch.”
It’s a tax break advocated by the White House, with President Donald Trump calling for the rebate in April as a way to revive the restaurant industry amid the coronavirus pandemic. Before the change, business meals were deductible at 50% of their cost. The provision will lead to $ 5 billion in foregone tax revenues, according to the Tax Foundation, an independent tax policy think tank.
Mr. Trump, who owns hotels and restaurants such as the Trump Grill in New York City – where a Bloody Mary called “You’re Fired” will set you back $ 18 – said the facility would “bring real life back to the restaurants; I think they make them hotter than before. ”With the bill passed by Congress, it goes to the White House to get Mr Trump signed.
While the facility has become a lightning rod for critics, there’s a bigger problem: a lack of corporate customers willing to pay for a three-martinis lunch during a pandemic.
Many restaurants are struggling to keep their doors open amid a dip in customer numbers and state and city restrictions. Employers across the country continue to allow their employees to work from home, while business travel has plummeted as the coronavirus soars to new records. In other words, while the meal tax break is included in the bill, it can’t help restaurants in the short term.
“We have exactly zero corporate customers, except suppliers and partners we work with, who show us grace and come by,” said Ashwin Deshmukh, owner of Short Stories, an all-day café and bar in New York’s Bowery neighborhood. City.
Before the pandemic, his all-day café and bar had many corporate clients. But that dried up with the crisis, and he doesn’t expect his corporate customers to return until later in 2021. The business meal tax break might help at the time, but he added, “We’ve got to make it until then.”
“Deposit”
The incentive bill includes other provisions that are sure to provide more immediate assistance to restaurant owners and employees, such as a second round of the Paycheck Protection Program, which was refreshed with $ 284 billion.
Aside from new PPP loans, other amenities that can help restaurants include the deductibility of business expenses paid with PPP loans, the increase in employee retention tax credit, and the tax deduction for business meals, according to the National Restaurant Association (NRA).
But the stimulus bill did not include support the industry group had pushed for, such as a $ 120 billion special fund to help restaurants and other hospitality businesses survive the pandemic. According to the NRA, 10,000 restaurants across the country have already been closed temporarily or permanently since early September.
The latest stimulus bill represents a “down payment,” Sean Kennedy, executive vice president of public affairs at the NRA, said in a statement. The industry group said it will continue to push for additional support in 2021.