This guest post is by Shashi Bellamkonda, director of social media and public relations — employees call him Social Media Swami — at Network Solutions, a company that helps small businesses establish an online presence and conduct online marketing. Having worked in the hotel and restaurant business for more than a decade, his love affair with the industry clearly has not ended.

These days, news about “jobs” has been gloomy. First, there was the news of Steve Jobs giving up the helm of Apple, one of the world’s most valuable companies. Then, the Bureau of Labor Statistics reported that the unemployment rate held at 9.1% in August, and leisure and hospitality changed little over the month.

I have been watching the refrigerator in the kitchen area of my office, and in the past few years, a lot of folks are bringing their lunches from home. The restaurant owners I meet tell me that their regulars are reducing the number of visits. In times of recession, people rightly hang onto their purse strings and start saving where they can, and eating out can be a casualty. The National Restaurant Association estimated that more than two of five consumers are not dining out or using takeout as often as they would like.

The tax-free lunch plan

President Barack Obama and Congress could join together to pass a law that allows any taxpayer spending $1,000 at restaurants in 2011 to write off that amount. In some form, this is already allowed for business expenses, with some restrictions. In my proposal, I make the accounting simple.

  1. Receipts from restaurants should be saved to be eligible for this tax relief.
  2. On average, for taxpayers in the 25% bracket, this is as good as a coupon such as Groupon or LivingSocial.

According to Syracuse University, there are more than 139 million taxpayers in the U.S. Imagine giving this population the incentive and the encouragement to spend. The national restaurant industry estimated that the total economic impact of the industry exceeds $1.7 trillion, as every dollar spent in restaurants generates $2.05 spent in the overall economy. Considering this, it would seem that steps taken to entice restaurant goers could go a long way to help kick-start the economy.

“The U.S. restaurant industry is an economic juggernaut whose annual sales are larger than 90% of the world’s economies — if it were a country, it would rank as the 18th-largest economy in the world,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the National Restaurant Association.

The 2009 “Cash for Clunkers” program reportedly saved 42,000 jobs in the auto industry. The restaurant industry can help the American economy expand with a plan such as mine.

Leave a comment. What do you think? Do you have other suggestions?

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8 Responses to “Tax-free lunch plan would kick-start economy and incentivize restaurant customers”

  1. Sandy Beach says:

    At a time when the U.S. Surgeon General is trying to curb obesity, why would we undercut that by giving taxpayers a license to overeat? Meals eaten out have, on average, 400 more calories than similar food prepared at home. I don't want my tax dollars subsidizing that overconsumption.
    You might say that, well, we can limit the tax deduction to "good" restaurants, but that would make it a regressive tax, i.e., one that benefits the wealthy more than the lower-income taxpayers, who would be less able to take advantage of the tax break.

  2. Shashib says:

    Hi Sandy,

    I think you make a great point about educating people on right consumption and avoiding overeating. I am working on another article with that trend and what restaurants can do. I think my point is to break the fear psychosis on spending . If without the recession people stopped eating in restaurants , then the industry has to take steps to change with the customer habits.

    Thanks for commenting. All opinions welcome.

    Shashi

  3. K.N.Vinod says:

    Shashi – As a restaurateur, I feel this is a great idea.
    To give you an example,
    I have a customer who used to frequent the restaurant at least once a week. Now days for the last two years or so, I noticed that his frequency has reduced. Over the years this customer has become a friend and I was having a very candid conversation with him. He tells me that he works for the government and nothing has changed as far as his monthly income is concerned; (except may be his 401k must have reduced). Even though he makes the same amount of money per month, he and his family have reduced their frequency of eating out. He tells me that some kind of a fear has set in and is not sure about the future. This customer lives in an affluent neighborhood of Washington DC.
    In my opinion, your idea of tax write off up to $ 1000/- is a splendid one and might just kick start the economy.
    And if and when it does, you should be nominated for a Nobel prize.. :-)
    K.N.Vinod
    twitter: @kvinod

    My recent post Kerala style Cornish hen/ Chicken – Kozhi Varatha Curry

  4. [...] http://t.co/h5iAcrz Tax-free lunch plan would kick-start economy and incentivize restaurant Link – Trackbacks This entry was posted in Uncategorized and tagged Breaking News, Live News, World [...]

  5. Ivana Taylor says:

    What I love about this article is that it's an IDEA that we can implement given our current tax code and infrastructure. Like anything, consumers can buy in or not by simply saving their receipts and reporting them. I agree with several of the comments here regarding subsidies and even obesity. But my focus is on generating ideas for improvement rather than finding the one perfect idea. It's going to take many small ideas to improve the economy for small business.
    My recent post How to Determine Who Will Be the Social Media Voice

  6. [...] Tax-free lunch plan would kick-start economy and incentivize restaurant customers. In 2009 we had the “Cash for Clunkers” program which is given credit for saving 42,000 auto industry jobs. Why not have a tax-free lunch plan? The restaurant owners claim that every dollar spent by customers results in $2.05 spent in the overall economy. The proposal would allow taxpayers to deduct up to $1000.00 in restaurant receipts. The Smart Blogs Network [...]

  7. [...] Tax-free lunch plan would kick-start economy and incentivize restaurant customers. In 2009 we had the “Cash for Clunkers” program which is given credit for saving 42,000 auto industry jobs. Why not have a tax-free lunch plan? The restaurant owners claim that every dollar spent by customers results in $2.05 spent in the overall economy. The proposal would allow taxpayers to deduct up to $1000.00 in restaurant receipts. The Smart Blogs Network [...]

  8. [...] Tax-free lunch plan would kick-start economy and incentivize restaurant customers. In 2009 we had the “Cash for Clunkers” program which is given credit for saving 42,000 auto industry jobs. Why not have a tax-free lunch plan? The restaurant owners claim that every dollar spent by customers results in $2.05 spent in the overall economy. The proposal would allow taxpayers to deduct up to $1000.00 in restaurant receipts. The Smart Blogs Network [...]

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