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Health & Fitness

A Suggestion from the 'Sensible Party'

Loosen up entertainment expense deductions to encourage spending and increase employment, using business money instead of government money to stimulate the economy.

To continue the discussion on possible fixes for our economy, gaining jobs and reducing the deficit, I am going to present suggestion number two, for your consideration.

I am sure there will be a lot of controversy over this suggestion, as many of us (myself included) often complain about the excessive compensation that corporate executives often receive. And I still think there should be a formula for that for "C" corporations.

However — there are some perks, which actually do work to help the economy, and can create more jobs. One of them is the deduction for entertainment expenses.

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Until about 20 some years ago, a business could fully deduct its entertainment expenses. Of course there was a lot of joking about three-martini lunches, and some of the entertaining was "intra" company.

Now the deduction is limited to 50 percent of the bill. And a lot of documentation is required to justify the business aspects of the entertainment, and worst of all, it throws up a red flag (in the opinion of many accountants) that invites the IRS to audit you.

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For those reasons, many companies just eat the expense rather than go through all the hassle, and of course they do much less entertaining.

By the way, one of the great things about this former perk, was that it was used extensively by lower echelon people — below VP or Director level — and was a very traditional way for salespeople to wine and dine perspective clients.

Once the new IRS rules came out, a number of restaurants went out of business, along with less business for resorts, hotels, etc.

I may be a little bit of a heretic here, but I am for rolling the rules back to full reimbursement, without all the documentation.

Restaurants and other entertainment venues are very often small businesses, and very often they are family run.

If this business deduction was made more liberal again, it would put a lot more people to work, and it would open many more opportunities for small business.

There really is validity to "spending your way" out of a recession, and in this case, it would not be the government spending stimulus money — but it would be businesses spending their money, and creating more income to be taxed.

I am looking forward to your comments, suggestions and discourse on this idea.

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