Lobbyists fight to save deductions: proposal would kill 80% provision

Nation's Restaurant News, August 29, 1988 by Ken Rankin

Lobbyists fight to save deductions

WASHINGTON--Food-service industry lobbyists are working furiously to defuse controversial legislation cutting back on business-meal deductions.

The bill--New Jersey Sen. Bill Bradley's plan to finance federal welfare "reform" by eliminating business-meal tax deductions for the wealthy--has already been pushed through the Senate with little debate and no public hearings.

The House-passed welfare bill contains no similar business-meal tax provision, but a joint congressional conference committee has been formed to thrash out the differences between the two versions, and that panel will decide the fate of Bradley's plan.

It is significant that a flurry of grass-roots restaurant industry lobbying has convinced the House-Senate conferees to agree to a tentative compromise under which food service would be spared further cut-backs in business-meal tax deductibility. But a spokesman for the National Restaurant Association cautioned against premature celebrating.

"This is still not official," he said, "and we won't know the outcome for sure until Congress returns to session in early September."

Under the fragile compromise struck before Congress adjourned for its annual August recess, Bradley's plan to phase out meal deductions for upper-income businessmen would be dropped from the bill in return for a new provision creating stiffer documentation requirements for those claiming meal and entertainment write-offs.

The original provision rammed through the Senate by Bradley and fellow Democrat Barbara Mikulski of Maryland would eliminate business-meal deductions altogether for individual businessmen earning more than $440,000 a year and phase out the deduction for those in the $360,000-to-$440,000 bracket.

Ironically, supporters of Bradley's plan told the Senate that the $800 million raised by slashing meal deductions for fat-cat businessmen would be used to reform welfare. But rather than being earmarked for welfare recipients, in reality that money would be used to provide federally subsidized child care for individuals who have adjusted gross incomes of more than $93,750 annually.

For their part, restaurant industry lobbyists call Bradley's plan "complex, unworkable, and poor tax policy."

In urging the Senate to "leave the business-meal deduction alone," NRA officials noted that "just two years ago Congress cut the business meal's deductibility from 100 percent to 80 percent" and "the full impact of this change is not yet known.

"Congress should learn the effect of the last tax change before altering the Internal Revenue Code again," they said.

The NRA also objected to the provision on the grounds that it would discriminate against unincorporated businesses and corporations--which would not be subject ot the deduction cutbacks--and charged that the bill's "sliding scale deductibility would greatly complicate" tax preparation.

Indeed, NRA staffers said, "our fear is that when conferees realize how unwieldy the Bradley proposal is, they will try for an easier "solution--slashing business-meal deductibility across the board, bringing it below its current 80-percent level."