Tax Panel Votes to Put Limit on Entertainment

The House Ways and Means Committee, continuing at a snail’s pace to write a comprehensive tax revision bill, agreed Monday to limit personal and corporate tax deductions for business entertainment and meals but made no decision on what restrictions to impose.

The committee rejected a proposal by Rep. Bill Frenzel (R-Minn.) to maintain current law, which allows nearly all business expenses for restaurant meals, sports events and conventions to be deducted as legitimate costs.

The tax-writing panel, beginning its second week of private meetings to produce its own version of President Reagan’s tax overhaul plan, also agreed to continue public financing of presidential political campaigns.

On a primarily party-line vote, the committee rejected a White House plan to eliminate the $1-per-taxpayer income tax checkoff. All 13 Republicans on the panel, joined by Democratic Reps. Cecil L. Heftel of Hawaii and Beryl Anthony Jr. of Arkansas, voted to repeal the checkoff system, but 19 Democrats voted against it.

Committee members also moved to limit deductions for home office expenses and to tighten the rules for deducting losses from business hobbies, although they agreed to exempt horse breeding and racing from the latter regulations.

But the key issue before the panel was how to treat business entertaining.

Committee members have been deluged by phone calls and personal visits from owners of restaurants, Broadway theaters, professional sports teams and others who insist that any limits on business deductions would drastically curtail revenue and thus devastate their industries.

The White House proposal would cap business meal deductions at $25 for each participant, plus half the additional cost, and limit convention expenses. It would also eliminate deductions for tickets to sporting events and theaters.