HAVE ANOTHER MARTINI, ON US!
Imagine if Congress voted to give businesspeople the ability to deduct from their taxes the cost of jewelry or fur coats they purchase for themselves and their clients, as long as the spending bears a "reasonable and proximate relationship to a trade or business" and occurs in a setting "conducive to a business discussion."
There would be an outcry, right?
Well, the House has just voted to do something equally outrageous-- expanding the current deduction for business meals and entertainment from 50% to 80%. This will drain an extra $8.4 billion out of the Treasury over the next ten years, according to the Joint Committee on Taxation, on top of the $6.6 billion a year the subsidy already costs.
The hotel and restaurant industries have pushed hard for this boondoggle, contributing $9.9 million in the 1997-98 election cycle in individual, PAC and soft money donations to congressional candidates and parties, according to the Center for Responsive Politics. Their top lobbyist, Kathleen O'Leary of the National Restaurant Association, could not contain her glee at the House bill. "We got the sun, moon and the stars," she crowed to The New York Times.
Indeed, this is corporate welfare at its most extreme. It's not as if the hotel and restaurant industry is hurting: total industry sales are projected to hit a record $354 billion this year and average check prices are higher than ever, the Times reports. Nor was the industry hurt back in 1993 when the deductibility of meals was lowered from 80 to 50 percent. Back then, TV ads paid for by the restaurant association warned that 165,000 restaurant workers would lose their jobs if the deduction was trimmed; in fact, the industry added more than 300,000 employees in the two years after the cut was made.
The law doesn't require that business actually be discussed during the $200 dinner or all-day golf outing; a business discussion doesn't even have to happen on the same day, as long as it takes place directly before or after the activity. No statistics are available as to who actually takes business meal and entertainment deductions, but it certainly doesn't include salaried workers who file the simple 1040 form. Or, for that matter, people making the minimum wage--which the hotel and restaurant industry has fought hard against raising.
But there's an election coming, and both parties are struggling for control of the House. With the most to lose, House Republicans--led by Bill Archer (R-TX), the chair of the House Ways and Means Committee--are practically giving away the store. In addition to the increase in the business meal deduction, their tax bill is glutted with giveaways -- nearly $100 billion -- for banking and securities firms, utility companies, oil and gas operators, the insurance and nuclear industries and other big corporate campaign contributors.
