WASHINGTON (AP) – The new emergency relief package includes a bite that President Donald Trump has long had on the buffet of his economic wish list: restoring full tax breaks for business meals in restaurants.
But experts say it’s scarce direct aid to an industry reeling from the pandemic, while critics ridicule it as an insensitive “ three Martini lunch ” for business.
The new $ 900 billion pandemic relief package going to Trump’s office after Congress approved it Monday night is delivering long-sought cash to businesses and individuals, and resources to vaccinate a country facing an increase in a virus that killed more than 300,000 people.
The under-the-radar provision in the bill restores the full deductions valued by business and lobbyists for good food and schmoozing. In any case, it could help the more toned parts of the devastated restaurant industry – eventually, as the economy recovers from the disruption of the pandemic and depends on the strength of the recovery and consumer spending, experts say.
For now, the reality of social separation and restaurant closures imposed by local governments is overshadowing corporate tax considerations.
According to government data, around 2 million restaurant workers across the country lost their jobs during the pandemic. If the current pace continues, a full job recovery won’t occur until the end of next year, the National Restaurant Association estimates. Some 110,000 restaurants, or 17%, have been closed long-term or permanently, based on a member survey by the trade group.
The new tax break “really isn’t the help they need, and it makes an injury worse,” said Aaron Allen, who leads a restaurant consulting firm in Chicago. “The airlines clearly have a better lobby in Washington.”
Americans for Tax Fairness said the break would “ mainly help to help high-paying executives enjoy three-martini lunches and the upscale restaurants they frequent. Neighborhood restaurants and their millions of laid-off workers … will get little or nothing. “
A more immediate help for restaurants could be the direct cash payments that go into the consumer’s wallets under the new government emergency package. Whether consumers remain too scared of the virus to go to a restaurant is an uncomfortable question.
Many in the industry had pushed for a $ 120 billion fund to provide grants to independent restaurants. That was passed through the House of Representatives in October, but did not make it to the final aid package.
“People are afraid of dining out, going to an office or eating indoors, making these types of deductions useless until there is more demand,” said Camilla Marcus, one of the founders of the Independent Restaurant Coalition and owner. from west (tilde) bourne. , a New York City restaurant that closed during the pandemic.
“Restaurants are struggling to survive and we need help paying our bills now so we can put people to work tomorrow,” she said.
The timing of the economic recovery is important. The full tax credits for restaurant business meals or takeout or delivery are temporary, only for 2021 and 2022 – unless extended by later legislation.
The new breakthrough will cost taxpayers $ 6.3 billion in lost revenue, estimates Congress’s impartial Joint Commission on Taxation.
“We view the business meal deduction as a medium-term recovery investment,” said Sean Kennedy, an executive vice president of the National Restaurant Association. “As we begin to return to a more ‘normal’ life cycle, the deduction will aid recovery.”
But the recovery has come to a standstill. About 20 million people in the US are unemployed and nearly 10 million jobs have been permanently cut since the pandemic hit in March.
The president and the Republican lawmakers calling for the reinstatement of corporate tax deductions say it could support the restaurant industry.
It was Trump’s own tax law in 2017, rushed by the then Republican majority in Congress, that lowered the corporate income tax rate from 35% to 21%, but reduced or eliminated those deductions. A rare amenity that was not business friendly, it halved the 100% deduction for business meals and eliminated it entirely for most entertainment expenses in venues such as sports and cultural events.
The deductions are usually in favor of higher-end restaurants, the part of the industry hardest hit by the pandemic’s economic disruption. That supposedly includes the restaurants associated with Trump’s own dozens of luxury hotels and golf resorts in the US and the world. In contrast, massive eateries and fast food and pizza chains are more likely to keep things together with takeout and delivery operations.
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