[Congressional Record Volume 149, Number 114 (Tuesday, July 29, 2003)]
[Senate]
[Page S10145]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. INOUYE (for himself, Mr. Stevens, and Mr. Cochran):
  S. 1482. A bill to amend the Internal Revenue Code of 1986 to repeal 
the reduction in the deductible portion of expenses for business meals 
and entertainment; to the Committee on Finance.
  Mr. INOUYE. Mr. President, I rise to introduce legislation to repeal 
the current 50 percent tax deduction for business meals and 
entertainment expenses, and to restore the tax deduction to 80 percent 
gradually over a five-year period. I am joined by my good friends, 
Senators Ted Stevens and Thad Cochran, as cosponsors of this measure. 
Restoration of this deduction is essential to the livelihood of small 
and independent businesses as well as the food service, travel, 
tourism, and entertainment industries throughout the United States. 
These industries are being economically harmed as a result of the 50 
percent tax deduction.
  The business meals and entertainment expenses deduction was reduced 
from 80 percent to 50 percent in the Omnibus Budget Reconciliation Act 
of 1993, and went into effect on January 1, 1994. Its results have been 
detrimental to small businesses, the self-employed, and independent and 
traveling sales representatives. Research conducted by the National 
Restaurant Association (NRA) indicates that the great majority of 
business meal users are small businesses and of such businesses, one-
fifth are self employed. On an average, business meal costs for small 
businesses is less than $15 per lunch. These groups rely on one-on-one 
meetings, usually during meals, for their marketing strategy, and the 
reduction of the business meals and entertainment deduction has 
impacted their marketing efforts.
  An increase in the meal deduction would have a significant impact on 
the overall economy. Accompanying my statement is the NRA's State-by-
State chart reflecting the estimated economic impact of increasing the 
business meal deductibility from 50 percent to 80 percent. The NRA 
estimates that an increase to 80 percent would increase business meal 
sales by $6 billion and create a $13 billion increase to the overall 
economy.
  I urge my colleagues to join me in cosponsoring this important 
legislation. I ask unanimous consent that the NRA's State-by-State 
chart and the text of my bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

   ESTIMATED IMPACT OF INCREASING BUSINESS MEAL DEDUCTIBILITY FROM 50
                          PERCENT TO 80 PERCENT
                              [In millions]
------------------------------------------------------------------------
                                               Increase in
                                              business meal     Total
                                               spending--50    economic
                    State                     percent to 80   impact in
                                                 percent      the state
                                              deductibility
------------------------------------------------------------------------
Alabama.....................................           $79          $163
Alaska......................................            17            29
Arizona.....................................           116           229
Arkansas....................................            43            85
California..................................           856         1,896
Colorado....................................           120           259
Connecticut.................................            76           143
Delaware....................................            21            37
District of Columbia........................            29            38
Florida.....................................           333           680
Georgia.....................................           198           443
Hawaii......................................            41            79
Idaho.......................................            23            46
Illinois....................................           293           688
Indiana.....................................           130           267
Iowa........................................            51           108
Kansas......................................            50           102
Kentucky....................................            90           180
Louisiana...................................            91           177
Maine.......................................            25            48
Maryland....................................           115           239
Massachusetts...............................           190           378
Michigan....................................           210           409
Minnesota...................................           113           255
Mississippi.................................            44            84
Missouri....................................           119           271
Montana.....................................            19            34
Nebraska....................................            35            71
Nevada......................................            66           116
New Hampshire...............................            31            57
New Jersey..................................           168           350
New Mexico..................................            36            68
New York....................................           396           774
North Carolina..............................           188           394
North Dakota................................            12            22
Ohio........................................           250           547
Oklahoma....................................            67           143
Oregon......................................            82           170
Pennsylvania................................           242           537
Rhode Island................................            27            50
South Carolina..............................            89           177
South Dakota................................            15            30
Tennessee...................................           130           285
Texas.......................................           499         1,165
Utah........................................            41            88
Vermont.....................................            12            22
Virginia....................................           146           308
Washington..................................           172           349
West Virginia...............................            28            49
Wisconsin...................................           106           228
Wyoming.....................................            10            16
------------------------------------------------------------------------
Source: National Restaurant Association estimates.

                                S. 1482

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. REPEAL OF REDUCTION IN BUSINESS MEALS AND 
                   ENTERTAINMENT TAX DEDUCTION.

       (a) In General.--Section 274(n)(1) of the Internal Revenue 
     Code of 1986 (relating to only 50 percent of meal and 
     entertainment expenses allowed as deduction) is amended by 
     striking ``50 percent'' and inserting ``the applicable 
     percentage''.
       (b) Applicable Percentage.--Section 274(n) of the Internal 
     Revenue Code of 1986 is amended by striking paragraph (3) and 
     inserting the following:
       ``(3) Applicable percentage.--For purposes of paragraph 
     (1), the term `applicable percentage' means the percentage 
     determined under the following table:

``For taxable years beginning in calendarThe applicable percentage is--
  2001..........................................................68 ....

  2002..........................................................74 ....

  2003 or thereafter.........................................80.''.....

       (c) Conforming Amendment.--The heading for section 274(n) 
     of the Internal Revenue Code of 1986 is amended by striking 
     ``Only 50 percent'' and inserting ``Portion''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.
                                 ______