Congress seems to be focusing its austerity efforts on America's most vulnerable citizens, including those who need help feeding their families. Meanwhile, large food subsidies that benefit the most affluent Americans aren't even on the table.
The House of Representatives recently voted to cut $4 billion a year from food stamps, known more formally as the Supplemental Nutrition Assistance Program (SNAP). A cut of that level would mean 3.8 million Americans would lose the help they receive to put food on their families' tables, according to the Congressional Budget Office. Democrats have resisted that effort, but with President Barack Obama's call for Congress to turn its attention back to passing a farm bill in the wake of the recent government shutdown, the level of food subsidies will once again be at the center of debate.
What nobody in the House is talking about, though, is the fact that wealthy corporate executives will continue to enjoy food subsidies of another sort. When CEOs of major corporations host business dinners at 5-star restaurants, they get to deduct that expense from their income taxes.
Imagine that the tab for dinner and drinks for 10 executives comes to $1,600. Current tax law allows companies to deduct half of the cost of business meals — in this case, $800. With a corporate tax rate of 35 percent, each dollar of deductions yields 35 cents of tax savings — so that $800 deduction saves $280 in taxes. This means one dinner for 10 people provides more public food assistance than the $279 an average household receives in food stamps for the whole month.
The IRS doesn't publish data on meal deductions taken by America's businesses. Citizens for Tax Justice, a non-partisan public interest research and advocacy organization, last examined the issue a decade ago and at that time found that food subsidies for businesspeople cost the government $4 billion a year. Given inflation, and a lack of evidence that businesses have cut back on their food and entertainment tabs, it's likely that the cost of this tax break is even bigger now.
Can someone please tell me why American taxpayers should subsidize meals consumed by CEOs and other businesspeople at no risk of experiencing hunger?
Food stamps provide a subsidy of about $1.50 per meal to SNAP beneficiaries. If the same $1.50 per meal subsidy were applied to the CEO dinner party mentioned above, the corporation's tax bill would be cut by $15. That would be 95 percent less than the tax reduction allowed by current law.
Another way tax policies subsidize the food and beverages consumed by affluent Americans is the lavish marketing that pharmaceutical companies spend on physicians. Drug companies annually spend tens of millions of dollars taking physicians on cruises, ski jaunts and other free trips, where they learn about the drug companies' latest products — when they aren't indulging in lavish meals or otherwise enjoying themselves.
In many instances, drug companies spend far more on marketing their drugs than they spend on research and development. All of the expenses of physician trips and other marketing efforts are fully deductible from corporate taxes. For every $10 million a drug company spends this way, taxpayers pick up as much as $3.5 million of the tab.
Why do so many members of Congress feel obliged to curb federal spending for food subsidies for people with bare pantries? Ending tax subsidies for fancy corporate dinners would make far more sense.
Scott Klinger is an associate fellow at the Institute for Policy Studies in Washington.Copyright © 2014, The Baltimore Sun