Part of the Covid-19 Relief bill scheduled for approval this week includes provisions for corporate tax breaks for so-called 3 martini lunch expenses. Designed to boost the restaurant industry’s flagging fortunes during the pandemic, the tax break is part of the stimulus bill negotiations.
From 50% to 100%
Prior to the measure, corporations can charge up to 50% of their meal expenses off their federal taxes since the 1980s. The new White House-backed proposal allows companies to now write off 50%. Treasury Secretary Steve Mnuchin made this proposal, also backed by Senator Tim Scott (R-SC), part of the ongoing stimulus bill negotiations. Democrats reportedly agreed to the measure in exchange for additional tax credits for low-income families and working poor.
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In a statement, Scott said that the measure is a “pro-worker, pro-restaurant, and pro-small business bill will lead to increased spending in restaurants and more income for staff.” His party mates said that the American Hotel and Lodging Association, US Travel, and the National Restaurant Association, support the measure.
“Nickel and Diming”
Senator. Ron Wyden (D-Or) a top Democrat on the Senate Finance Committee said that “Republicans are nickel-and-diming benefits for jobless workers, while at the same time pushing for tax breaks for three-martini power lunches. It’s unconscionable.” Many people picked up on Wyden’s reactions, and social media became abuzz with comments last Monday.
For some people, the tax breaks added insult to injury. Citizens already complained about the reduced stimulus check amount from $1200 to $600. “Let them eat cake,” a derisive term synonymous with out of touch leaders, became a trend on Twitter and other social media platforms. The cost to taxpayers for this proposal remains unknown. However, tax experts expect it to reach a few billion dollars a year.
Social Media Reactions
Some of the top comments on social media include tweets and reactions from prominent personalities. This includes Berkeley professor and former Labor Secretary Robert Reid, who echoed Wyden’s statement. He said “The deal includes corporate tax cuts for three-martini power lunches but nickel-and-dimes jobless workers. GOP priorities.” Jake Tapper of CNN, who asked: “Do we get to backdate the three-martini lunch expenses and also what if we were eating alone but thinking about work?”
Citizens also joined the fray. A Mike Ponsford surmised that the tax breaks will be much longer than the relief for citizens. He tweeted ”Long after the $600 stimulus has been spent on necessities, those three-martini lunch tax deductions will just keep on coming. For years and years.” Teacher and former Republican candidate from Virginia Matt Walton were incredulous. He asked “The draft language of the emergency coronavirus relief package includes a tax break for corporate meal expenses…So let me get this straight… as a teacher I have to pay for my own lunch, but a corporation can get a tax break for one?
Bring Back Life to Restaurants
Earlier this year, President Donald Trump pushed for bigger tax deductions for corporate entertainment and meal expenses. Along with Larry Kudlow, director of the White House National Economic Council, they aggressively pushed the deductions since April. Trump urged that the US should “go back to the original” version of 100% tax deduction for entertainment and meals.
Trump added that “They’ll send their executives, they’ll send people there, and they get a deduction. That is something that will really bring life back to the restaurants; I think to make them hotter than before. You know, they used to have it. And when they ended it, it was really never the same. It was never the same.” In a roundtable discussion last May, he suggested the measure as urgent versus the other emergency bills. “I think it’s, frankly, more important than even the other things we’re talking about,” Trump said at the time. “I guess, short term, what you’re talking about, is more important, but long-term, the deduction would be phenomenal.”
‘Still a Bad Policy’
Both conservative and liberal economists and tax experts rejected the idea. Kyle Pomerleau, an analyst for the conservative American Enterprise Institute, said that “Months later it is still bad policy, and still not good economic relief for the current situation. It just should not be in there. Critics pointed out that the measure does little to help restaurants affected by the pandemic. The measure would only benefit business executives, a group that does not need urgent help at present.
Watch the video of CNBC television featuring Robert Frank reporting on a provision in the GOP stimulus bill that would allow a 100 percent deduction for business meals:
Do you agree with the measure bringing back 100% tax breaks for corporate meals, AKA “3 martini lunch”? Let us know what you think of this measure. Share your thoughts in the comment section below!