Home sports Boost the schmooze? Trump wants tax dining deduction back


Boost the schmooze? Trump wants tax dining deduction back

by Ace Damon
Boost the schmooze? Trump wants tax dining deduction back

WASHINGTON (AP) – It may be a strange gesture in a time of social detachment, but President Donald Trump is leaning on his request to Congress to restore all tax benefits, valued by companies for fine dining and small talk. Trump is taking advantage of the pandemic crisis to push for one item on his economic wish list: full tax deductions for restaurant business meals and other entertainment expenses.

The tax benefits for fine and similar meals clash with the reality of social separation required by the government as a critical measure to contain the coronavirus. Restaurants and sports stadiums, with their corporate boxes, are empty across the country.

But Trump argues that restoring corporate tax deductions can help strengthen the pulverized restaurant industry. It was Trump's own tax law in 2017, which reduced the corporate tax rate from 35% to 21%, which reduced or eliminated those same deductions. It was a rare provision that was not conducive to business.

Deductions tend to favor sophisticated restaurants, the part of the sector most affected by economic displacement. Mass market restaurants and fast food and pizza chains are more likely to keep things together with the shopping and delivery business.

"This is a great time to bring it back," Trump said of the tax cut during a meeting at the White House on Wednesday. "Otherwise, many of these restaurants will find it difficult to reopen."

If the tax cut comes, the president said, "it will open" the restaurant business and, "in fact, I think the restaurant business will really be bigger and better than it is now." Trump has repeatedly predicted that the economy will recover robustly, boosted by "great pent-up demand" from consumers.

Restoring meal deductions may help at least the heaviest part of the restaurant industry – but in the future and depending on the strength of the recovery and consumer spending, some experts believe.

"I think it's a huge help? No," said Jonathan Maze, editor-in-chief of Restaurant Business magazine. "In theory, you can see this help as business travel increases. Maybe it will take some people to restaurants that maybe they hadn't done it before. ”

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

"While the restaurant industry is in urgent need of federal assistance, restoring deductibility is an action that should fall further on the priority list," said Kevin Schimpf, senior industry research manager at Technomic. "With so many business people and office workers working remotely in the near future, this action is unlikely to bring many benefits in the short term."

Congressional leaders have not yet evaluated Trump's proposal.

Trump's tax law in 2017, passed by the 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 expensive corporate tellers in sports stadiums to Double-A baseball games in small towns, entertainment deduction has been a valuable privilege for businesses. Some companies continued to spend without the tax incentive, seeing the benefits of entertainment as a reward in future revenue. But the tax change took a bite.

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

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