Embedded in the $ 900 billion stimulus bill passed by Congress Monday night is a provision that angers lawmakers and taxpayers: a tax cut for business meals. Senator Bernie Sanders, an independent from Vermont, called the deduction “corporate socialism for the rich,” which would allow executives to cancel “a 3-martini lunch.”
It is a tax cut backed by the White House, with President Donald Trump calling for the deduction in April as a way to revive the restaurant industry amid the coronavirus pandemic. Prior to the change, business meals were deductible at 50% of their cost. The provision will lead to a waived $ 5 billion in tax revenue, according to the Tax Foundation, an independent think tank on fiscal policy.
Mr. Trump, who owns hotels and restaurants like the Trump Grill in New York City – where a Bloody Mary called “You’re Fired” will give you back $ 18 – said the provision “will really bring life back to the restaurant; think about making them hotter than before. “With the bill now passed by Congress, it went to the White House to sign Mr. Trump.
While the mood has become a lightning rod for critics, there is a bigger problem at hand: the lack of business customers willing to pay for a three-martini lunch during a pandemic.
Many restaurants are struggling to keep their doors open amid a dip in customers and restrictions imposed by the state and the city. Employers across the country continue to allow employees to work from home, while business travel has declined as coronavirus rates reach new records. In other words, even if the meal tax cut is included in the bill, it may not help restaurants soon.
“We have exactly zero business customers, apart from salespeople and partners, with whom we work, showing pity and stopping,” said Ashwin Deshmukh, owner of Short Stories, a cafe and bar throughout the day in Bowery District. from New York.
Before the pandemic, the cafe and its all-day bar had a lot of business customers. But this has dried up with the crisis and his business clientele is not expected to return until later in 2021. The tax cut for business meals could help at that time, but, he added, “You just have to we do until then. “
“Advance”
The stimulus bill includes other provisions that will certainly provide more immediate assistance to restaurant owners and employees, such as a second round of the Wage Protection Program, which has been refreshed by $ 284 billion.
In addition to the new PPP loans, other provisions that could help restaurants include deductible business expenses paid with PPP loans, improved tax credit for retaining employees, and tax deduction for business meals, according to the National Restaurant Association (ANR) ).
But the stimulus bill failed to include some aid for which the industry group was pressed, such as a $ 120 billion dedicated fund to help restaurants and other hospitality companies survive the pandemic. Already, 10,000 restaurants across the country have closed temporarily or permanently since the beginning of September, according to ANR.
The latest stimulus bill is an “advance payment,” Sean Kennedy, executive vice president of public affairs for ANR, said in a statement. The industry group said it will continue to push for additional support in 2021.