White House secures ‘three martini lunch’ tax deduction in draft of relief package

The draft language of the emergency coronavirus relief package includes a tax break for corporate meal expenses pushed by the White House and denounced by congressional Democrats, according to a summary of the deal circulating among congressional officials and officials who are familiar with the provision.

The officials spoke on the condition of anonymity to describe a proposal that had not yet been publicly released.

President Donald Trump has for months talked about securing the deduction—derisively referred to as the “three-martini lunch” by critics—as a way to revive the restaurant industry badly battered by the pandemic.

But critics said it would do little to help struggling restaurants and would largely benefit business executives who do not urgently need help at this time. Some Democrats recoiled at the proposal, though it has also been denounced as ineffective by conservative tax experts.

Democratic leaders agreed to the provision in exchange for Republicans agreeing to expand tax credits for low-income families and the working poor in the final package, according to a Democratic aide who spoke on the condition of anonymity to share details of internal negotiations.

“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,” said Sen. Ron Wyden, D-Ore., the ranking Democrat on the Senate Finance Committee.

The cost to taxpayers of the proposal is not known, though tax experts expect it to not exceed a few billion dollars a year.

Since the 1980s, businesses have been able to deduct 50% of their meal expenses off their federal taxes. A proposal championed by the White House and Sen. Tim Scott, R-S.C., would increase that deduction to 100%, allowing companies to deduct the full cost of a business meal off their federal taxes.

Treasury Secretary Steven Mnuchin included the meal deduction as a White House priority in negotiations, two people with knowledge of matter said. A Treasury Department spokeswoman declined to comment.

In a statement, Scott heralded the legislation as a “pro-worker, pro-restaurant, and pro-small business bill will lead to increased spending in restaurants and more income for staff.” Republicans noted support for the measure by the American Hotel and Lodging Association, US Travel, and the National Restaurant Association.

Trump and Larry Kudlow, director of the White House National Economic Council, have been among the most aggressive proponents of restoring the meal deduction.

At the White House in April, Trump said the United States should “go back to the original” version of a tax deduction for entertainment and meals.

The president added: “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 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.”

During a roundtable discussion in May, Trump brought up the idea unprompted and suggested it would be more important than hundreds of billions in emergency small-business loans.

“I think it’s, frankly, more important than even the other things we’re talking about,” the president said of restoring the deduction. “I guess, short term, what you’re talking about, is more important, but long-term, the deduction would be phenomenal.”

Liberal and conservative economists and tax experts have panned the idea.

“Months later it is still bad policy, and still not good economic relief for the current situation,” said Kyle Pomerleau, a tax analyst at the conservative-leaning American Enterprise Institute think tank. “It just should not be in there.”

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7 thoughts on “White House secures ‘three martini lunch’ tax deduction in draft of relief package

  1. this is literally stupid. this would suggest that people are going to eat out more since they can write off 100% of the bill vs 50%. just more socialism for the rich….

    1. I’m a conservative and I agree this is completely unnecessary. I thought we were trying to simplify taxes and take away all the deductions that keep the wealthy from paying taxes.

    2. If you think the Republican Party is interested in getting their wealthy donors to pay taxes, you’ve missed a few news items the last few years… it’s all about giving the rich “their” money back while convincing enough other people to vote for polices that aren’t in their own best economic interests because they’re “socialist”. The pendulum has swung too far towards the ultra-rich and is due to come back towards the middle.

    3. Yes Joe don’t disagree with you, but honestly the democrats do the same for their donors. The perception is they are for the middle class, but if you really dig into things they are no different about giving perks to their wealthy donors. For example look at the breaks they want to give wealthy democratic supporters from high tax states like NY and CA. I’m old enough now to have learned the wealthy of either party will get to keep their money and those of us in the middle keep seeing our earning power erode. I was so much better off financially in the 90’s vs now and I can’t really break it down for you, but their is a huge difference. It’s been going the wrong direction for years.

    1. Your right. He’s being very short sighted on this one and just looking at his own small sphere of influence. This does nothing to benefit the average person or restaurant. Besides who drinks martini’s at lunch anymore lol.

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