Image by Nenad Maric from Pixabay
KEY POINTS
- The restaurant stands to lose $225 billion in the next three months as a result of the coronavirus
- The 2017 tax bill eliminated the business deduction for entertainment but left the meal deduction at 50% as long as the meals are not lavish
- Trump's business interests include hotels with pricey restaurants and golf courses
The coronavirus pandemic has dealt a major blow to the $863 billion U.S. restaurant industry as social distancing and shelter-in-place orders have forced closures of bars and dining rooms, with no end in sight as COVID-19 ravages the country. Now, President Trump is calling for the elimination of provisions in the 2017 tax reform bill that tightened deductions for business meal and entertainment expenses.
The National Restaurant Association has begged Congress for relief in the face of the pandemic and hailed the massive $2.2 trillion relief package that was signed into law last week as an "important first step to help restaurants weather the storm, take care of our employees and prepare for when we are given the signal to open our doors again."
The association earlier estimated the industry would sustain a $225 billion loss and eliminate as many as 7 million jobs in the next three months as many try to convert their operations to take-out and delivery.
"As the restrictions continue, we are facing economic headwinds that will lead many restaurants to shut down operations, lay off workers, and end service in our communities," association Executive Vice President of Public Affairs Sean Kennedy said in a release.
The 2017 tax reform bill eliminated the ability of businesses to deduct the cost of things like tickets to baseball games and golf outings designed to cement client relationships although meals remained 50% deductible, as long as the expense was not lavish.
Trump, whose business interests include high-end hotels with pricey restaurants and golf clubs, Wednesday called on Congress to bring back the full meals and entertainment deduction, saying it will give the restaurant industry a much-needed boost once the economy normalizes in the wake of the pandemic.
However, the 2017 law made few changes to the meal deduction allowance although it did eliminate the entertainment deduction, so Trump's suggestion will do little to boost the restaurant industry.