Save your local favorite
We all have out favorite “locals” — restaurants and bars in our towns and neighborhoods that we go to several times a week or month.
For me here in Whitefish, that would include Tupelo, the Great Northern and the Tap House. Each of us has our own list of favorite locals all across Montana.
All these “locals” are all now closed because of COVID-19. They are all at risk of never opening again if their owner’s mortgages, rents, or loans cannot be paid while they are closed and have no cash flow. Thousands would lose their jobs. But we would all be losers. Our communities, our daily lives would all be dimmer.
But there is a solution!
Each of these “locals” has (or could quickly acquire) gift cards that their regular customers could purchase NOW to use LATER to purchase food and beverage when they re-open. This would create cash flow NOW to help pay the owner’s mortgages, rents, loans, etc. and thus survive to re-open again.
Many of us would be quite happy to purchase several hundred dollars of gift cards at each of our favorite “locals” to help ensure that they survive and can re-open later this spring or summer.
State and Federal governments SHOULD encourage this type of private investment by allowing local supporters to deduct 50% of every dollar we spend on purchasing local gift cards from our taxable income for 2020.
This would be a bargain for governments. Their revenue “loss” would be 10 cents to 15 cents on the dollar spent by local supporters like me, depending on each individual’s 2020 tax bracket.
Example: I purchase a $1,000 dollars of local gift cards from my favorite locals. I then deduct $500 of this amount from my taxable income for 2020. If I am in a cumulative (federal plus state) tax-bracket of 20%. So I will owe $100 less in taxes when I file my 2020 return next year. ($500 x 20% = $100)
This is a huge win for governments. Almost all the financial aid for popular restaurants and bars will come from their loyal customer base. These payments will be voluntary and come from PRIVATE households. The bottom line costs to governments will be only 10 to 30 cents on the dollar.
The only real risk is on the loyal customers who purchase gift cards from their favorite locals. There is the risk that despite the infusion of cash flow, some locals still won’t survive the shut-down. This is a risk that I — and I believe, thousands of others — are willing to take to try to keep our favorite locals in business and the many jobs they support. It is a small investment in the future of our communities and one that many will be willing to make.
So state and federal government should start now to create a tax incentive program that will facilitate this kind of private sector financial bridging that will protect the communities we live in and love.
One stumbling block: The potential deductions may be too small to make a difference in an individual’s tax liability given the recent $12,000 per person deductible. True. So fix it. Governments can make a one-line change in next year’s 1040 Form that allows for this category of “local” expenditures to be used in addition to the standard deduction.
Ted Morton, Whitefish