[Congressional Record Volume 145, Number 50 (Tuesday, April 13, 1999)]
[Senate]
[Page S3640]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BREAUX:
  S. 774. A bill to amend the Internal Revenue Code of 1986 to increase 
the deduction for meal and entertainment expenses of small businesses; 
to the Committee on Finance.


              Business Meal Deduction for Small Businesses

  Mr. BREAUX. Mr. President, I rise today to introduce a very important 
bill for small businesses in Louisiana and throughout our country that 
I also introduced during the 105th Congress. My bill would restore the 
80 percent deduction for business meals and entertainment expenses, 
thus eliminating a tax burden that has seriously hampered many small 
businesses in our country.
  Small business is a powerful economic engine, both nationwide and in 
Louisiana. Small businesses have helped to create the prosperity that 
we have all enjoyed in the last few years. They are leaders in the 
innovation and technology development that will sustain our economy in 
the 21st century. Nationwide, small business employs 53 percent of the 
private work force, contributes 47 percent of all sales in the country, 
and is responsible for 50 percent of the private gross domestic 
product.
  For these reasons, I believe the tax code should encourage, not 
discourage, small business development and growth. For the more than 
225,000 self-employed and for the thousands of small businesses in 
Louisiana, business meals and entertainment take the place of 
advertising, marketing, and conference meetings. These expenses are a 
core business development cost. As such, a large percentage of these 
costs should be deductible.
  For many years, businesses were allowed to deduct 100 percent of 
business meals and entertainment expenses. In 1987, this deduction was 
reduced to 80 percent. The deduction was further reduced in 1994 to 50 
percent because of the misconception that these meals were ``three 
martini lunches.''
  Contrary to this perception, studies show that the primary 
beneficiary of the business meal deduction is not the wealthy business 
person. Studies indicate that over two-thirds of the business meal 
spenders have incomes of less than $60,000 and 37 percent have incomes 
below $40,000. Low to moderately priced restaurants are the most 
popular types for business meals, with the average check equaling less 
than $20. In addition, 50 percent of most business meals occur in small 
towns and rural areas.
  In 1995, just one year after the deduction was reduced to 50 percent, 
the White House Conference on Small Business established the 
restoration of the deduction as one of its top priorities for boosting 
small business. In Louisiana alone, it is expected that the positive 
economic impact of this proposal could exceed $67 million in 
industries, such as the travel and restaurant industry, that employ 
over 120,000 people. I urge my colleagues to support this legislation.
                                 ______