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Trump wants tax breaks to encourage people to watch sports, travel around the US: how that could backfire

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  • President Trump is seeking tax breaks to encourage Americans to watch sports games and travel around the US in an effort to boost the economy and restore normalcy.
  • “We’re looking at deductions for business expenses, restaurants, baseball games, if hopefully they’re going to open,” National Economic Council Director Larry Kudlow said last week. “Sightseeing, tourism — we’re looking at tax deductions there, too, to help the economy get going.”
  • But the measures don’t address what’s holding back the economy: the raging coronavirus pandemic and fear of infection.
  • Visit Business Insider’s homepage for more stories.

President Donald Trump is pushing for tax breaks that would encourage Americans to watch sports games, eat at restaurants, and travel around the US in a bid to boost a flagging economy.

But experts say those measures could backfire since they do not address the problem ultimately restraining normal economic activity around the US: a raging coronavirus pandemic that shows no signs of abating anytime soon.

America topped 3 million coronavirus infections on Tuesday, and 46,500 new cases were recorded as well, according to NBC News. Florida, Texas, and other southern states are experiencing a surge of infections.

The Washington Post reported the Trump administration is seeking a range of tax incentives to spur a return to normalcy in the midst of the outbreak. Trump supports an “Explore America” tax credit that would reimburse taxpayers for vacations taken in the US. He also endorsed reducing the tax bill for companies claiming employee meal expenses at restaurants, and wants similar tax cuts for the entertainment industry, the newspaper reported.

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Other top administration officials are aligned with the president, and the White House said it has been simultaneously aggressive in trying to eliminate the virus and taking steps to strengthen the economy. National Economic Council Director Larry Kudlow said last week that the administration sought tax breaks for baseball games.

“We’re looking at deductions for business expenses, restaurants, baseball games, if hopefully they’re going to open,” Kudlow said. “Sightseeing, tourism — we’re looking at tax deductions there, too, to help the economy get going.”

But the sports world is adjusting to a new reality. Major League Baseball is set to play a 60-game season starting later this month, CNN reported. Fans, however, won’t initially be allowed to watch games in-person, which reduces any benefit from the incentive Trump wants to enact.

“The reason we don’t have sports back in the U.S. right now is that the virus is out of control in the U.S. Tax incentives don’t fix that,” Binney told The Post. “We should not have large gatherings of people for optional events when the virus is out of control, and we definitely shouldn’t be incentivizing that behavior.”

People don’t feel comfortable going out to restaurants or shopping malls and they’re changing behavior

Depending on the activity, it could be difficult to maintain six feet of social distancing as well, which increases the odds of infection. A Morning Consult Poll released on July 6 found that roughly 33% of Americans on average said they felt comfortable going out to eat at a restaurant, taking a vacation, and going shopping. 

The results suggest that people are changing their behavior to reduce their risk of becoming infected with the coronavirus. Foot traffic at sit-down restaurants has dropped considerably compared to 2019 as well, according to data from SafeGraph, which tracks US consumer activity.

florida reopening restaurants coronavirus

Lora Bonjaku prepress a cheesesteak at Due Amici Pizza & Pasta Bar in the Ybor City neighborhood at on June 26, 2020 in Tampa, Florida. Florida has suspended the consumption of alcohol at bars, but not restaurants, amid a surge in positive coronavirus cases.

Octavio Jones/Getty Images


Health experts say the risk of infection is heightened when people congregate in crowds, as they would at a baseball stadium to watch a game or eat inside a restaurant. 

“This virus really likes people being indoors in an enclosed space for prolonged periods of close face-to-face contact,” William Schaffner, a professor of preventive medicine at Vanderbilt University, told Business Insider’s Aylin Woodward in May.

For example, several factors, such as the prospect of crowding and enclosed spaces, make flying and indoor dining at restaurants much riskier compared to an outdoor activity like camping. 

Tax incentives don’t address the main problem: fear of infection

Back in May, Kudlow also said he backed a plan from Republican Sen. Martha McSally that would federally reimburse individual taxpayers for up to $4,000 in domestic vacation expenses for trips at least 50 miles from home. That threshold would be doubled for couples to $8,000.

But that measure wouldn’t tackle the scourge of the pandemic, experts say.

“Reducing the after-tax cost of taking a vacation is not going to address people’s fears of getting the virus while on vacation,” Kyle Pomerleau, a tax policy expert at the conservative-leaning American Enterprise Institute, told The Post. “That is the fundamental issue facing these industries, and what the White House needs to understand.”

The McSally proposal also drew fire from economists who argued it would mainly benefit wealthier taxpayers and not be well targeted.

Read more: An investment chief who doubled 3 of her firm’s ETFs within 3 years told us the most overlooked technological innovation on her radar — and shared the 3 stocks she’s been snapping up since the pandemic started

“Low and most middle-income families will receive no or minimal benefit as you can’t claim the maximum credit until you’re pretty well off,” Matthew Gardner, a senior fellow at the left-leaning Institute on Taxation and Economic Policy, wrote in a blog post. “The credit is nonrefundable, so a married couple can’t claim the full $8,000 credit unless their income tax liability before credits reaches that amount.”

However, such tax incentives are moot in boosting the economy if state and local governments shutter businesses amid a spike of infections once again.

California Gov. Gavin Newsom last week ordered 19 counties, including Los Angeles, to close indoor operations at restaurants, bars, and movie theaters. Experts say the state reopened too early.

The drive for tax cuts from the Trump administration has skeptics even among conservatives. The Heritage Foundation, a conservative think-tank, said in a report that “changes in tax policy will not have a particularly significant effect” in stimulating the economy as long as the pandemic is ongoing.

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