- Included in the still-secret details of the COVID-19 stimulus deal struck Sunday is a “three-martini lunch” tax break for corporations, according to The Washington Post.
- Officials familiar with the negotiations told the paper that the measure is in a draft of the proposal.
- The corporate tax break would allow companies to deduct the full cost of a business meal from their federal taxes, rather than the current 50%.
- Trump has pushed for the measure since April. The White House did not immediately respond to a request for comment.
- According to the Post, Republicans accepted tax relief for poorer Americans in a trade to secure the measure.
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The draft version of the COVID-19 stimulus package has a tax break for corporate hospitality lobbied for personally by President Donald Trump, according to The Washington Post.
The measure would allow businesses to deduct the full cost of a business meal from their federal taxes, as opposed to the current 50%, the paper reported.
Although Congressional leaders struck a deal for a stimulus package late Sunday, the details have not been made public, leaving reports like the Post’s as the best source of what may have made the cut.
According to the paper, Treasury Secretary Steven Mnuchin had included the tax break as a White House priority in the negotiations.
The White House did not immediately respond to a request for comment from Business Insider.
It has been derided by critics as a break on a “three-martini lunch” which will not provide value for money in reviving the economy.
Summaries of the overall package released by Democrats â€” as well as statements from House Speaker Nancy Pelosi, Senate Minority Leader Chuck Schumer, and Senate Majority Leader Mitch McConnell on Monday â€” make no direct mention of it.
But a Democratic aide told the Post that Democrats accepted the measure in exchange for GOP agreeing to expanded tax credits for the working poor and low-income families.
Meanwhile, there has been public backlash to the planned distribution of direct stimulus checks of $US600, half the amount of the last round in April.
Trump brought the corporate dining suggestion to the table in April as a way to boost the restaurant industry, the Post reported.
“They will send their executives, they will send people there, and they get a deduction,” the Post reported him as saying. “That is something that will really bring life back to the restaurants, I think make them hotter than before.”
It was included in the GOP’s $US1 trillion draft Health, Economic Assistance, Liability Protection, and Schools Act (HEALS Act) in July, along with corporate pandemic liability protections. Both measures have been fiercely resisted by Democrats, and the HEALS Act did not pass.
Oregon Democratic Sen. Ron Wyden slammed Republicans for having “held up aid” in order to pass the measure in the most recent negotiations.
Republicans held up aid for jobless workers and families so they could include a tax break for three-martini lunches for lobbyists and CEOs in the final deal. https://t.co/c8xKzallcO
— Ron Wyden (@RonWyden) December 21, 2020
Howard Gleckman, a senior fellow at the Tax Policy Centre, wrote in May that the measure is unlikely to boost the economy effectively.
“Since the president has a long history in the hospitality business, his affinity for this tax subsidy isn’t surprising,” he wrote. “But as a tool to stimulate the current troubled economy, this tax break is, as the president himself might say, a total loser.”
He argued that it “won’t do much more than increase the reward for business execs who game the system,” noting that the current 50% business meal deduction is already often used for tax avoidance.
Congress is expected to vote on the package on Monday, after a long tug-of-war between more generous proposals favoured by the Democratic Party and leaner deals put forward by Republicans.