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Congress wants business owners to head to restaurants and demand a full tax deduction to do so.
Financial advisors and tax experts said whether this is enough to save the besieged restaurants is another story.
The $ 900 billion proposal, released on Monday and It weighs 5,593 pages, It includes a set of relief measures aimed at passing Americans through the pandemic.
The measure includes $ 600 incentive checks for adults and children, as well as a $ 300 weekly unemployment increase.
The legislation also encourages business owners to help support restaurants by visiting often.
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In fact, the bill calls for a “temporary allowance for full deduction of business meals,” and applies to the cost of food or drinks served by a restaurant that is paid or incurred in 2021 and 2022.
“As you know, the president is worried about restaurants, so we’ve re-deducted business meals,” Treasury Secretary Stephen Mnuchin, speaking on CNBC’s “Squawk on the Street”, said Monday morning.
Currently, there is a 50% discount allowed for meals and snacks at work, as well as meals for customers in the event of business conduct.
If the scale sounds familiar, it might be because you’ve seen it before. The HEALS Act, a previous Senate relief proposal, called for a temporary 100% discount on work meals.
Senator Tim Scott, Republika Srpska, endorsed this measure and was known as the Restaurant Worker Support Act of America.
“It’s great for small businesses and restaurants; they really need that injection in the arm,” said Michael Goodman, certified financial planner and CPA at Wealthstream Advisors in New York.
“Unfortunately, it won’t help at the moment, because it’s in 2021 and 2022,” he said. “He will do nothing for those restaurants that will have to go out of business.”
The proposal comes at a difficult time for the hospitality industry. Restaurants lost 17,400 jobs In November.
Meanwhile, municipalities are closing down amid resurgence of COVID-19 cases.
Tax professionals are also questioning whether business owners are willing to take the risk of eating out – especially at a time when their finances are already struggling.
“A lunch of three martinis is a great idea in theory, but you assume people have money to spend,” said CFP Dan Herron, CPA and Director of Elemental Wealth Advisors in San Luis Obispo, California.
“It’s great for rich people who can pump money through a company, but I know people who struggle to make ends meet,” he said. “Their priority is not a lunch of three martinis.”
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