Eat, Drink and Deduct: A few weeks ago, at income-tax time, I wrote a column about restaurant owners lobbying Congress to restore 100 percent tax deductibility to business-related meals. Currently, businesses can write off only 50 percent of the cost of business meals. Naturally, restaurant owners, who figure to serve more meals if business customers can deduct the full expense, have a big stake in this issue. Penelope Miedaner, executive director of the Arizona Restaurant Association, wrote to tell me her side of the story. To her, it's essentially a fairness issue. Here's her argument: "Consider this scenario. You are a salesperson for a company that sells earth-moving tractors. The construction company you are working with is super busy and the purchasing agent has little time to meet with you. You do manage to schedule this person for a one-hour lunch presentation. "The cost of this lunch meeting is only 50 percent deductible. Yet if you had advertised in New Times, the cost would be 100 percent deductible. Are you more likely to make a sale over lunch or through an ad in the paper? Probably the lunch meeting will be more valuable to you than an ad, even an ad in a construction journal. "To be consistent, all marketing, whether advertising or sales meetings, should either be 100 percent deductible or 50 percent deductible. It is not fair for the restaurant industry to be discriminated against in this arena." Reader Roger Hagadorn also took issue. His point: "There are many different kinds of businesses with a lot of different needs. It's easy for politicians to lump all businesses together and stereotype them all as big, evil and impersonal, but the vast majority of business people in this country are ordinary people trying to make a living. "The business meal is just a tool, and to say that a business meal is less legitimate, a less important part of doing business and should not be fully deductible, is ridiculous. Many companies spend money on giveaways like calendars, pen and pencil sets, note pads, hats, tee shirts, etc., for the same reason that a business person would buy somebody lunch. Why is a meal more 'evil' and therefore a less legitimate expense than any of these other incentive-to-do-business-with-me items?"
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The problem with both arguments, it seems to me, is failing to draw the line somewhere. Miedaner doesn't distinguish between a Happy Meal at McDonald's and dinner at Christopher's. And, yes, maybe calendars and note pads are harmless enough. But stretch that logic just a little bit, and business could ask taxpayers to subsidize cars, vacations or other "incentives to do business with me" for clients. So I offer this compromise: Let's make legitimate business meals fully deductible. But let's also limit them to the cost of a tuna fish sandwich and coffee at lunch, and a Denny's meat loaf special at dinner. The tractor salesperson could still meet for lunch with a purchasing agent, and have the taxpayer pick up the tab. But this way, they just won't be eating any better than the working stiffs who are subsidizing them.--