Wall Street Journal: This Coronavirus Tax Policy Idea Wasn’t on the Table. Then Famous Chefs Called the President.
WASHINGTON—Daniel Boulud's restaurants are largely shuttered because of the coronavirus pandemic, but his latest recipe—an easy-to-grasp pitch paired with a dash of celebrity—put a dormant tax-policy idea at the forefront of President Trump's mind.
Three times this week, Mr. Trump called for expanding tax deductions for business meals and entertainment as a way to revive the hard-hit restaurant industry after stay-at- home orders are lifted. His proposal followed a phone call with Mr. Boulud and other famous chefs Sunday.
The idea has gained little momentum in Congress, and tax experts aligned with both parties have panned it. Some say the tax break would benefit corporations, high-end restaurants and Mr. Trump's own businesses while doing little for local eateries in desperate need of immediate help.
"As so many Americans find themselves unable to pay their first-of-the-month bills, once again, Trump prioritizes elites—with their two-martini lunch and night on the town," Rep. Lloyd Doggett (D., Texas) said in a statement.
Mr. Trump's embrace of the plan is the latest example of how celebrities and prominent associates can shape or circumvent the administration's policy process and bring ideas directly to the president.
In an interview Thursday, Mr. Boulud, whose restaurants include Daniel in New York, which has a two-star rating from the Michelin Guide, said he felt an obligation to use his fame to advocate for his industry.
"I have colleagues who have small restaurants who are counting on us," he said. "You can grab the phone and say, ‘I'd like to speak to the president,' and they seem to be like, ‘Well, yeah, if the chef wants to talk to us it must be serious.'"
Before the call with Mr. Trump, Mr. Boulud said he talked with Suri Kasirer, a New York lobbyist and consultant who serves with him on the board of Citymeals on Wheels. In addition to broader issues facing the industry, she suggested discussing the meals and entertainment deduction, which Congress and Mr. Trump curbed in the 2017 tax overhaul.
"It's always best to put something very specific in front of somebody," she said. "It's the perfect thing to bring up to the president. He understands this business because he was in this business."
Hours after the call, Mr. Trump broached the possibility of expanding the deduction during a Sunday news conference at the White House.
Praising Mr. Boulud as well as fellow chefs Wolfgang Puck, Thomas Keller and Jean-Georges Vongerichten, the president warned that the U.S. is "going to lose all these restaurants and they're not going to make it back. They have to get going."
On Wednesday morning, the president returned to the subject on Twitter and then again at a White House briefing. "It'll keep our restaurants going," he said at the briefing. "In fact, I think the restaurant business will be actually bigger and better than it is right now."
The chefs were able to reach Mr. Trump because an aide to Mr. Puck saw Ray Washburne, a Dallas-based investor, restaurant owner and political donor, on Tucker Carlson's Fox News show talking about a business-interruption insurance issue the chefs also care about. Fox Corp. and Wall Street Journal parent News Corp share common ownership.
Mr. Washburne, in an interview, said he received a call from Mr. Puck about 15 minutes after his appearance about two weeks ago.
"If you really want to get the message out, you've got to give it directly to the president," Mr. Washburne counseled the chefs. By Sunday afternoon at 3 p.m., Mr. Trump and his top economic adviser, Larry Kudlow, were on the phone.
Administration officials said the conversation sparked Mr. Trump's interest in the tax proposal, which would require congressional approval. So far there have been only preliminary discussions between the administration and lawmakers, officials said. One official said the administration is considering expanding the deduction beyond what existed before 2017. The White House declined to comment beyond the president's statements.
The 2017 tax overhaul eliminated the business-tax deduction for entertainment and kept deductions for meals at 50%. That move was projected to generate $23.5 billion over a decade to help pay for lowering the corporate tax rate. The lower rate also made deductions less valuable, and Mr. Boulud said he noticed the difference in his private-dining and events business.
"They cut drastically, drastically, to the bone," he said. "The JPMorgan, the Morgan Stanley…Business was good, but business was not the same."
Tax experts across the political spectrum say it makes sense to limit meals and entertainment deductions.
"It's essentially a personal expense masquerading as a business expense," said Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy, a progressive group. "It's a hole you can drive a truck through in the tax code."
Mr. Boulud said the roughly $2 trillion economic-relief law includes provisions that would help the restaurants, but he argued that the industry would need an extra jolt once people are able to dine out again.
Expanding the deduction could have widely different effects across the industry, said Michael Graetz, a former Treasury official who teaches tax law at Columbia University.
"I'm worried about the Indian restaurant across the street from my apartment and the Oklahoma rib place down the block," he said. "They're not reliant on corporate executives who are going to deduct the cost of their ribs."
OpenTable said that U.S. bookings and walk-in customers at the more than 60,000 restaurants that use the booking platform have virtually dried up since the coronavirus hit. The National Restaurant Association declined to comment on the tax proposal.
Mr. Puck said restaurants, among the largest employers in the country, need more political clout.
"We are an important part of the structure of America, of the American life, of everybody's life," he said Thursday. "And I really think we should have a bigger voice than we've had so far."