Newspaper article THE JOURNAL RECORD

Deduction Change Hits Business Lunch Plans

Newspaper article THE JOURNAL RECORD

Deduction Change Hits Business Lunch Plans

Article excerpt

By Clifford J. Levy

N.Y. Times News Service

The business lunch once seemed so blithely simple. Shepherd some clients to a nice restaurant, order a steak and a few highballs, make a couple of deals, gossip over the cheesecake. Hand a charge card to the waiter after barely glancing at the check.

But first came warnings about cholesterol and alcohol and sagging productivity, and now _ as if the conspiracy to destroy this venerable perk were not complete _ the government has taken another step in its long-running campaign to reduce the tax deduction for business meals and entertainment.

The change, which took effect on Jan. 1, is rippling through the country, ushering in a new era of austerity for some companies in advertising, publishing and other industries that like to do their brainstorming over white tablecloths. It is also worrying many restaurateurs who had hoped that they were turning the corner after a long slump.

"This will finish off fine dining in America," said Stephen E. Elmont, the owner of Mirabelle, a restaurant in Boston, and president of the National Restaurant Association. "We are under siege."

Congress lowered the deduction for business meals and entertainment from 80 percent to 50 percent last year as part of the Clinton deficit-reduction package. It estimated that the move would raise $50.3 billion from 1994 to 1998.

Will the new rules wipe out a corporate culture that has flourished for decades? Probably not, but they seem to be chipping away at a practice that some executives always considered a kind of inalienable right.

So it is no surprise that some companies are complaining that the public does not grasp the value of these meals, particularly in an age when offices are so chockablock with phones, computers, faxes, modems and other gadgetry that face-to-face contact with co-workers and clients is increasingly rare.

The drop in the deduction is also angering truck drivers and others who spend much of their lives away from home.

"Somewhere in Congress they thought that they were going after the fat cats, but what they got is the truck driver spending $3 for lunch on the road," said David Berry, vice president of the Swift Transportation Co. …

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