The "Three Martini Lunch" Provision in the New Relief Bill, Explained

In a bizarre twist, the ongoing coronavirus pandemic has led to the potential return of the business “three-martini” lunch.

The most recent COVID-19 relief package was a typical Congressional compromise, one that helped the music industry, randomly brought funding to new museums and also made illegal streaming a felony. There’s a lot in there and, like most last-minute legislation, it’s weird and could have been handled a lot better.

One odd twist: A 100% federal tax break for corporate meal expenses, up from the 50% deduction that’s been standard since the 1980s. This new standard is expected to cost taxpayers a “few billion” per year.

President Trump and Sen. Tim Scott (R-S.C.) both think this proposal will prop up the restaurant industry via increased spending. An arguable point … if we weren’t in a pandemic and suggesting people not gather with strangers or eat indoors (or even, in some places, leave home at all).

As the Washington Post reports: “Critics said it would do little to help struggling restaurants and would largely benefit business executives who do not urgently need help at this time. Some Democrats recoiled at the proposal, though it has also been denounced as ineffective by conservative tax experts as well.”

And Sen. Ron Wyden (D-OR) noted: “Republicans are nickel-and-diming benefits for jobless workers, while at the same time pushing for tax breaks for three-martini power lunches. It’s unconscionable.”

While something like the proposed Restaurants Act would better and more directly help the hospitality industry, the renewed deduction was reportedly agreed upon by Democratic leaders in exchange for expanded tax credits for low-income families and the working poor.

In a statement by The Independent Restaurant Coalition, the overall pandemic-related funding allocation “falls woefully short,” but the organization did suggest — as a temporary measure — it provides additional time to negotiate a new plan when president-elect Joe Biden takes office.

Eater has a good breakdown of how the overall new stimulus package helps but ultimately doesn’t help the restaurant industry: Unlike airlines, movie theaters or the music industry, there is no direct financial aid here. The new bill does provide additional unemployment assistance and stimulus checks, though less than what people received in the spring. There are also additional tax credits and rental assistance for businesses, along with more preferential loan terms to the hospitality industry via the Paycheck Protection Program.