Should Restaurant Workers Pay Tax On Free Meals?

I believe I mentioned in Monday’s Mr. Softee post that I’d toiled for four summers as a soft-serve technician for the Dairy Queen. The hours were horrid, the pay was insulting, but the Blizzards were free — or at least one per 8-hour shift was free. Now, a politician in Michigan wants to rid food-service employees throughout his state of the benefit of free lunches.

State Rep. Mark Meadows from East Lansing has introduced a bill that would charge tax on any free grub for employees of restaurants and food establishments.

If the bill passes, employees would start having to pay tax as early as Oct. 1.

A state representative who opposes the bill pointed out that the state spends millions subsidizing Hollywood studio films made in Michigan and thinks it’s hypocritical to look for a revenue source from the food-service industry:

The idea of taxing teens who work at Taco Bell to pay for Michael Moore’s fat-cat meals is no way to solve Michigan’s problems… All the problems in this state, and the Democrats think this is going to solve our problems?

No Free Lunch: ‘Taxing Teens at Taco Bell’ [MichiganCapitolConfidential.com]

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  1. d0x360 says:

    Thats a pretty stupid idea. How can you pay tax on something that was free? Should my friends pay me tax on food when I cook them lunch? Give me a break.

    • Gramin says:

      It’s the same as paying tax on winnings from the lottery or other contests, i.e. winning a car. While I don’t agree, taxes on “free” items have been around for quite awhile.

      • partofme says:

        A lottery isn’t free, is it? Sure, it’s a high risk, low value financial product that you have to pay income taxes on gains of… but do you get to write off losses? Furthermore, where’s the line drawn between, “I got a reaaalllly great deal on this transaction” and “The difference between the supposed market value of what you gave me and the supposed market value of what I gave you must be considered my income”?

        • AnthonyC says:

          I don’t know about the lottery, but you can certainly write off losses in casinos… up to the limit of your winnings. So if you win a $10,000 slot jackpot, and can prove you lost $12,000 at other times during the year, you can write off $10,000 (thus owing no income tax on the winnings). This also applies to capital gains taxes. You can write off capital losses to offset capital gains (plus up to another $3000 in losses beyond your total gains).

    • wrjohnston91283 says:

      The theory is that the “free” meal is income. If I work 5 days a week, 52 weeks a year, and get a “free” meal that’s worth $5, that’s $1,300 worth of compensation that’s currently untaxed.

      • LMacConn says:

        So, depending on how this bill is not written, it could also require homeless people to pay “sales” tax on “free” meals from soup kitchens?

        • Gramin says:

          No. That would fall under charitable contributions, which are not taxed. In fact, it’s actually a tax write off for the business/group providing the free food.

          • the Persistent Sound of Sensationalism says:

            So the giant loophole in the bill would be that business could call the free meal a charitable contribution to a low income worker and not only would the employee not have to pay tax, but the business could claim it as donations on their taxes…

            Sounds like they should leave well enough alone in this arena.

            • Gramin says:

              Their isn’t a loophole. Businesses have to donate money and goods to a charitable organization, they just can’t give away free food and call it a charitable donation. The rules are different for individuals.

              • Firethorn says:

                That’s only a bit more paperwork to set up a subsidary charity, though…

                • PupJet says:

                  aka…filing for a 501(c)(3) like most corporations/organizations do; however it’s also a bit more money. I know here in Ohio you would be looking at a minimum of $1300 for such a privvy. Although if they did it through a lawyer, it would probably skyrocket to around $5500.

          • ElleAnn says:

            Following that train of logic, restaurants can write off meals given to employees as charitable contributions and pay less in taxes.

      • Jacquilynne says:

        Except they’re not trying to charge income tax, they’re trying to charge sales tax.

        • wrjohnston91283 says:

          Would have been nice if Chris has mentioned that…

          • sagodjur says:

            It was in the linked article.

          • freelunch says:

            Kind’ve my thought to…
            Technically, the ‘free’ lunch should already be considered a taxable benefit at the national (IRS) level. This article had me very confused because until I realized it was State taxes we are talking about…

            Not too surprising though… you would expect an “income tax” state to pursue taxes on benefits that the IRS taxes… so it is not a reach for a “sales tax” state to pursue similar benefits and cash flows.

      • nonsane says:

        that’s assuming that if i were not offered free food that i would still work there. And how do you prove a meal was received? Just because it’s free doesn’t mean i want to eat a blizzard everyday. The assumption would likely be that you took it.

    • partofme says:

      Unfortunately, the government has been trying to weasel their way into every dollar they can get. What’s most ridiculous about this is that it’s a major discontinuity. Suppose you’re given a discounted item (it could be a meal in this case). 50% off? You pay tax on the price you pay. 90% off? You pay taxes on the price you pay. Say they want to discount it all the way to just a single penny. You pay taxes on that single penny that you paid. But as soon as it’s discounted to free, BAM! You must pay taxes on the full MSRP. Which really sucks these days when MSRPs are always bloated to make it seem like you’re getting a good deal.

    • Mary says:

      I received tuition remission from the university I worked for, and the fact that they didn’t’ charge me tuition was considered income by the state.

      So I had to pay taxes like I was making $6,000 more a semester than I actually was. It was still cheaper than paying out of pocket, but it was still a pain in the butt.

    • FredKlein says:

      Yes.

      From IRS.gov:
      “Gift Tax
      The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.”

  2. Skyhawk says:

    How about for ONCE, a politician pushes a bill that CUTS spending?!!

    It isn’t lack of taxes that’s the problem. It’s the out-of-control spending.

    We’re headed for something really bad when the whole deck of cards comes crashing sown.

    • shoelace414 says:

      We’ve been cutting taxes and spending since the 1980′s and now we’re left with a crumbling infrastructure, massive teacher layoffs.. It’s time to raise taxes.. raise the income tax, raise property taxes..

      • TuxthePenguin says:

        Michigan has not been cutting spending.

        http://www.senate.michigan.gov/sfa/StateBudget/TotalStateSpending_AppropriationHistory.pdf

        The state budget is $3 billion more this year than in 97-98. That’s even after a reduction of $3 billion in the last two years. How is that cutting spending?

        • Xay says:

          Does everything cost the same as it did in 97-98?

          • JCZ says:

            Do the same number of people live in Michigan? No. The population in Michigan is falling. People are moving away. Jobs are being lost. Government spending has not adjusted for this fact. Jennifer Granholm is a failure. All that Michigan politicians can come up with for fixing the problem is a subsidy for film makers, a “Cool Cities” project (cool jobs would be better), and this garbage. Jennifer Granholm is notorious for being in Japan on a trip, but was totally clueless that Honda was searching for a new place to build a factory. Honda was meeting with people from Indiana, Kentucky, but not the biggest auto producing state in the US that is losing jobs. Does that say incompetence?

            • Xay says:

              Michigan’s population has dropped below its 1997-1998 population? That is pretty damn bad.

              There are more variables to setting a state budget than just going back to an earlier one. Costs increase and spending priorities change. the population may be smaller, but they may have different needs that have to be addressed. I can’t speak for the competence of the governor – I’ve been too busy watching the neverending train wreck that is about to hit the Florida budget.

        • OnePumpChump says:

          “That’s even after a reduction of $3 billion in the last two years.”

          That’s how it’s cutting spending.

          • TuxthePenguin says:

            Yes, in the last two years it has cut spending. But you can’t then claim that after spending at least $6 billion more (he said 80s, I can’t find data that far back) since 97 that because you cut $3 billion you’ve been cutting spending the entire time.

      • DangerMouth says:

        A fellow Californian? ;~)

      • RickN says:

        Where do you live? Neither my country, state, county, nor city have cut “spending since the 80′s”.

      • Javin says:

        Michigan is in the U.S. my friend. I can see that you’re not from this country, or aware of how its funding works. We’ve cut no spending. The more taxes we’ve paid, the more asinine ways to spend them our fantastic government has managed to dream up. I’ve watched my taxes increase every… single… year… for the past 30 years, and no, this has nothing to do with the tax bracket I’m in. Come back to the U.S. to have this conversation. That, or get your head out of your ass.

      • Javin says:

        Michigan is in the U.S. my friend. I can see that you’re not from this country, or aware of how its funding works. We’ve cut no spending. The more taxes we’ve paid, the more asinine ways to spend them our fantastic government has managed to dream up. I’ve watched my taxes increase every… single… year… for the past 30 years, and no, this has nothing to do with the tax bracket I’m in. Come back to the U.S. to have this conversation. That, or get your head out of your ass.

      • Akuma Matata says:

        “It’s time to raise taxes.. raise the income tax, raise property taxes.”

        Then prepare for more unemployment. You don’t help grow an economy by increasing taxes.

        • captadam says:

          Tax rates are historically low … so, the inverse of your theory suggests that our economy should be exploding right now. Trouble is, it’s in the toilet, even though taxes have been cut and cut and cut and cut for thirty years.

          We the people want our services, we want our entitlements, and we’re gonna be DAMNED if the socialists make us pay for them. In other words, we’re spoiled children. Let’s be adults and raise taxes.

          • TuxthePenguin says:

            Funny you throw “entitlements” in there. The very idea behind entitlements is that you aren’t paying for them, someone else is…

          • iggy21 says:

            Wow, you fail at seeing the point. It’s NOT the taxes but the spending. That’s why we’re in the crapper.

            • danmac says:

              It’s pretty clear that in order to maintain a budget, you need to balance the income and the expenditures.

              income (taxes and other revenue) = expenditures —> balanced budget

              People like you focus on cutting the expenditures, whereas people like captadam look and increasing the income (taxes). He’s not missing the point…he just doesn’t look at it from your point of view.

              I’m sure an people will be quick to point out that there are numerous variable that complicate this equation, but I’m not trying to give an economics here.

              • AngryK9 says:

                Yep. Increase the income by taking more from the people who don’t have anymore to give.

                • danmac says:

                  I’d like to know how you inferred from my post that we should tax the poor more…I’m certain I never implied anything like that.

          • frank64 says:

            In my state of Mass tax rates are historically high, both income and sales. Plus they added taxes to things that were not taxed before. Then they allowed the towns to add hotel and meals taxes surcharges.

          • Akuma Matata says:

            Actually, the really adult thing would be to grow up and cut entitlements. If the government gives you something, it had to take it from someone else first.

      • Darury says:

        You do realize that per student expenditures has increased roughly 10-fold in the last 30 years without any change in the results.

        Until people come to realize that you can’t increase taxes without causing additional issues, the budget issues won’t get resolved.

        This is the same thing as “We’ll make x billion from sin taxes, AND we’ll make everyone to stop those same things that we’re basing our revenue plan on”. It just doesn’t work that way.

      • MauriceCallidice says:

        “I’ve been cutting taxes and spending since the 1980′s”

        [Citation Needed]

    • Sayersj629 says:

      How about for once instead of politicians pushing bills. We all forget about the bills and just go push some politicians.

  3. danmac says:

    “Asshole, sir, Major Asshole.”

    “I knew it! I’m surrounded by assholes! Very well…keep firing, assholes!”

    This is how I feel about Mr. Meadows and that state representative.

  4. Emperor Norton I says:

    Charging tax to a minimum wage worker for a $5 dollar meal is disgraceful!
    Anyone in favor of that should be horsewhipped.
    And how many free meals has this asshat gotten from lobbyists?

    • your new nemesis says:

      Interesting, can we tax campaign donations as income? I don’t really know that much about campaign finance laws.

      • oldwiz65 says:

        Campaign finance laws are pretty much totally ignored by elected officials, who always find ways around them. For example, you can have a charitable “foundation” that’s run by members of your family. Stopping elected officials from accepting dirty money is harder than cleaning up the gulf.

  5. dolemite says:

    On the one hand…it makes sense. On the other hand…how low can you go? These politicians routinely get free trips and other perks on the job, while of course not even having to worry if they will be able to afford or even get health insurance, or other “mundane” problems the rest of us peons worry about on a daily basis. Do they pay taxes on the golf trip resort “seminars” and things they get invited to?

    • Tim says:

      Things like that are regulated under political contribution laws. Usually, it appears as a gift from a corporation (a 517, 501(c)3, 501(c)6 or something of the sort) to a politician’s PAC. Sometimes, the politician does have to pay taxes on it. Sometimes s/he doesn’t.

    • Javin says:

      I’m all for it, so long as the politicians are held accountable, and have to pay taxes on EVERY SINGLE GIFT, no matter how big, or how insignificant, that they receive. If they get something for “free” then they should have to pay taxes on it. Period. See how long the law sticks around when it’s money out of THEIR pocket, instead of the minimum wage worker’s.

  6. areaman says:

    If this becomes law, what would keep DQ from charging their workers $.01 for Blizzards???

    Then this asshole (Mark Meadows) would probably want to make another law to make it illegal to discount food for people who work in the food industry.

    • TuxthePenguin says:

      They’d still consider the normal value less the $0.01 and call it a “employment subsidy” that would then be taxable.

      • partofme says:

        There’s always a way around it. You can’t call it an employee subsidy if the deal is available to everyone. Just bring in your coupon for a $0.01 blizzard!*

        *Coupons only available in employee break room. Employees only in break room. One coupon per customer per day.

        • axhandler1 says:

          This reminds me of that Mitch Hedberg routine:

          “Pizza Hut will accept other pizzeria’s coupons. That makes me wish I had my own pizza place. Mitch’s Pizza – this weeks’ coupon: free unlimited pizza! Special note: coupon not valid at any of Mitch’s Pizza locations. “Free pizza oven with purchase of a small coke.”

          • partofme says:

            Yes! It’s contrived and ridiculous, but so is charging income tax for a free $5 meal while on the job.

        • Palmer says:

          Typically with coupons, and always with rebates, you have to pay the tax on the full price, and then the discount comes off of that.

          $20 off a $100 item = $100 worth of taxes but only $80 (plus taxes) paid.

    • partofme says:

      As fun as that exercise was, read the actual text of the bill and the summary. “A meal provided free of charge or at a reduced rate to an employee during work hours by a food service establishment licensed under…”

      Then proceed to seethe concerning idiot lawmakers.

  7. Liam Kinkaid says:

    I hate when there’s no additional detail. C’mon, originating article, give some background. Yeah, it’s a tax grab, but what are the justifications for or against it?

    The restaurants don’t have to pay tax on the food they purchase, because they collect tax from end users, but they’re also losing money (as they do on any benefit provided to employees) by giving it away or reducing the price. I don’t know if the food benefit is tax deductible to the restaurant as a normal business expense (I’ve forgotten that from my tax classes).

    • Gramin says:

      Taxes have a sole purpose: to create revenue. That’s the justification for it.

    • wrjohnston91283 says:

      The food given away for free is deducted as “cost of goods sold”. You don’t get an additional deduction based on the “free” part. If A $5 meal costs me $3, I deduct the $3 (like I would if it was sold to anyone).

  8. smbizowner says:

    the fat cats get fatter and the rest of us pick up the tab….

  9. Megalomania says:

    In one way of thinking, it does make sense – because they are offered this sort of benefit, workers are paid less, so the state collects less tax. In a much more straightforward way of thinking, dude, fuck you and find some way to cut your budget instead of taxing the people who make most likely the absolute least money of anyone in your state.

    • Loias supports harsher punishments against corporations says:

      But fringe benefits aren’t taxed towards the employee, they are covered by the employer.

  10. smo0 says:

    If this needs to be done to generate revenue, it needs to be the last on the list.
    There are other spending cuts and areas they can generate money from.
    Other states seems to manage without doing this.

    • partofme says:

      I’m all about making an ordered list. Kinda like I’ve always said that there should be an order for how the government’s bills get paid. The very first thing that gets paid is tax returns, since that’s not their money to begin with. The very last thing that gets paid is the State Senate, followed finally by the Governor. If we run out of money before we get there, we run out of money before we get there.

  11. backinpgh says:

    Should I also pay tax on my free work uniform? Or how about the free heating and air conditioning I get in the building I work in?

    • DarksSideMoon says:

      They also are so kind as to offer free air and parking. This travesty needs rectified immediately, you will now have to pay a 50 cent an hour tax for the air you are getting for free.

    • AnonymousCoward says:

      Shhhhh. You never should have said anything. You’ll give them ideas.

    • partofme says:

      It’s actually sales tax, so it would only reasonably apply to things that your place of employment usually sells. Unfortunately, this still leaves a nice big opportunity for congresscritters to tax us. Congresscritters usually sell loads of bullshit. Now, for the nice people in their own state, they’re willing to give us that bullshit ABSOLUTELY FREE. Unfortunately, that means we’re now going to have to pay them for the sales tax on it.

    • Big Mama Pain says:

      Yeah, I was wondering how they’d apply the tax to all the free “grazing” restaurant employees partake in while on the clock. I’ve lived on a piece of bacon here, nibble of cheese there, french fry or two, eating food that was made twice on accident, taste testing prepped items, overcooked steaks, etc for years as a chef, hardly ever even eating a real “meal” even if it was free. Tax THAT, Michigan! Seriously, what a fucking douche; he must know that restaurant employees often don’t have the time to go vote because they work such ridiculous hours

  12. Loias supports harsher punishments against corporations says:

    It’s a fringe benefit, not part of the employee’s income, and should be taxed to the owner thusly. Since he already pays tax on food he buys, we already do what is needed.

  13. Murph1908 says:

    What’s next, charge tax on the difference between normal sale price and employee price?

    One restaurant I worked in after college, we paid half price for meals. Of course, we paid tax on the price paid.

    I imagine if this bill passes, there will no longer be free meals for employees. But there will be a lot of 4 cent employee meals. That’s 5 cents with tax, please. The only way to respond to that is to charge full tax on the ‘value’ of the meal.

    Then you have to do that to everyone. Car dealership employees? Full tax on MSRP, not on the employee pricing. Target employlee discount? Full tax on normal price.

    Every time a tax idea that makes sense is suggested, it’s shot down by its ‘adverse affect on the poor.’ Hopefully the silver lining of that is that this stupid idea is shot down for the same reason.

    • Megalomania says:

      Well, rather than an adverse effect on the poor, this ONLY affects the poor. I don’t think many people with one job who are over the poverty line are particularly reliant on free meals from their workplace.

  14. Noah says:

    Passing a law is one thing..enforcing it is another. How about this: put it as another line in your 1040. “Total worth of free meals at a restaurant”. That should generate about as much income as the internet purchases tax line ($0 from me every year).

    • Gramin says:

      I love Amazon. And I love them even more since they said “UP YOURS!” to North Carolina!!! AMAZON FTW!!!

    • Riroon13 says:

      Speaking of enforcement…

      When I go to a sit-down restaurant, even if I pay with a debit card, I always try to pay for the tip in cash. Since tips are considered taxable income, I’d much rather my server keep as much as he/she can, and I’m sure it’s a whole lot easier for the gubment to trace a debit/credit tip than a cash one.

      • JuliB says:

        There are taxes calculated at the rate of 8% on non-tip-traceable purchases. In other words, on all non-credit card paid bills (with tip included – so by not putting a tip on it the bill is calculated as a cash sale), they assume that the tip was 8% of the pre-sales tax total and the server pays income tax on that 8%.

        Regardless, I do as you do and pay the tip in cash if possible. I also will sometimes just put a buck or two on the receipt so the server pays tax on the $2, and then give the rest in cash.

    • JuliB says:

      Personally, I’ve been putting down about 150 every year. Better to appear to comply than to ignore it completely.

      • frank64 says:

        In Mass there is a safe harbor provision. You pay a set amount based on your income and they can’t go after you for sales taxes from out of state. It is a fairly low amount, so a Mass resident might use it if he is worried and shops out of state or online a lot. It is only valid(I believe) for the items that cost less than $1,000. It is kind of what you do, but this is part of the Mass tax forms.

        Disclaimer: Not tax advice, above text for entertainment purposes only.( Some troll called me on giving tax advice once, even when that was not the intent and then told me how wrong and stupid I was. I pointed out where I was right, but………..I think he got kicked out, but he is probably back under a different name. He used STFU alot in his arguments)

  15. Polish Engineer says:

    This is just plain dumb. Most of the zit faced kids behind the fast food counter make so little they probably get a full tax refund anyway. I see the revenues from this being a drop in the bucket compared to the overall budget shortfall the states are facing.

    The better plan here is to admit that you cannot provide all the services you currently offer, and cut some spending.

  16. DeadWriter says:

    After that, tax on comped meals, coupon discounts, and things earned with points and miles (some of which already are taxed).

    Really, the way around this, at least for the companies it to value the meal at 1¢. The employee pays, the restaurant has ascribed a discounted price, tax is calculated, and everything is fine. The store gains the benefit of tracking, via another rout, how many employee meals were sold by looking at how many 1¢ meals were sold.

    I worked for a company that owned a large number of restaurant chains. They would sometimes track promotions of “free” items this way. It varied by restaurant chain, but I always thought it was a neat secondary way to make sure that accounting processes were working right.

  17. waltcoleman says:

    A Democrat who wants to raise taxes? Shocking…

    • danmac says:

      Thank you for you constructive comment. It was very insightful and really helped contribute to the conversation. I will now give the appropriate response so we can ignite a bi-partisan flame war:

      A Republican who wants to spin a political issue into an attack on the entire Democratic party? Shocking!

      The ball is in your court.

    • adamczar says:

      This comment single handedly changed my mind about all Democrats. I see the truth now!

  18. SBR249 says:

    What I want to know is what kinds of employee benefits are generally taxed in the US and what’s not. For example, if an employer pays for part of the worker’s health insurance premium and that’s considered a benefit then would that be taxed? What about if the employer provides free coffee in the morning and an occasional (semi-regular) meal/snacks at meetings?

    If benefits are broadly taxed across the board then I say go ahead and tax these free meals. But if they aren’t then it’s really an a$$bag move to try to wring a few million dollars from the fast food/restaurant workers, a significant portion of whom probably can barely make ends meet as it is.

    • Firethorn says:

      Disclaimer: I’m just an average joe, but my parents ARE accountants.

      Medical is deductable.

      The rules, well, can take up a phone book. Basically, if it’s a benefit for the employee and doesn’t directly assist with his performance of his job, then it would count as income.

      Company car driven to the grocery store from home to home with personal groceries – taxable
      Certification course to maintain/improve an employee’s qualifications for his job – deductable
      ‘Free’ $2k watches? Taxable as income
      Cell phone for on-call employee? Deductable expense.

    • wrjohnston91283 says:

      In general:
      If a benefit is provided as a “working condition” for the benefit of the employer, it is not taxable.
      “De minimus” benefits are not taxable, such as personal use of the copier, donuts, coffee, employee picnics, small non-cash gifts for birthday (which is why many companies give giftcards as a small bonus)

      Some items are specifically taxed or not taxed, including:

      The employer paid portion of medical insurance is not taxable.
      The employer paid portion of group life insurance IS taxable.
      Tuition reimbursement is not taxable (up to about $5,000 a year)

      This all relates to INCOME tax. The article refers to a SALES tax on employee meals, which is a whole different area.

  19. DanRydell says:

    Is this sales tax or income tax?

    For income tax the argument would be that it’s compensation, but we all get benefits like health insurance for which we don’t pay income tax.

    For sales tax the argument would be that it’s like having a coupon for a free meal – you still have to pay tax on the full value when you use a coupon (at least in some or most states). My response would be that I didn’t use a coupon, I utilized a benefit of my job.

    Either way, I think this is pretty stupid.

  20. peebozi says:

    This is great. Do you know how much money will be raised by taxing the free meals, lunches, gym memberships, health care and travel State Representatives receive! Oh wait, you mean he didn’t include his industry in this tax?

    • Gramin says:

      Legally speaking, that would be zero tax, as their strictly forbidden from accepting free gifts/entertainments/meals, etc. from anyone.

      • peebozi says:

        I would never imply that a politician would be a crooked, thieving, lying, stealing, POS but how about the free perks they receive, as part of their “job”, from the taxpayers? don’t they receive stipends, health care, etc? Why yes, yes they do.

  21. PhillipSC says:

    I’ll be happy to pay a 1000% tax on my free meal…. 1000% of 0!

  22. c_c says:

    There would be no way of enforcing this – if most restaurants are like the pizza place I worked at way back in the day, your free meal isn’t rung up or anything – no real record of it exists. What is the state going to do, audit the amount of pizza dough used compared to sales?

    • Tongsy says:

      The problem is that places like Mcdonalds and Subway aren’t, everything is counted down to a really low level, so there would have to be a record otherwise the counts would be all wrong.

      • frank64 says:

        Don’t they dump things when they get to old. I know they do for mistakes. Dumping or employees eating. Tomatetow Tomato

    • Doubts42 says:

      The business owners get to write off the cost of those meals as a business expense. If they don’t track the meals then they don’t get the tax break. most restaurant owners will choose screwing over the workers than paying any extra $$$.

  23. ClaudeKabobbing says:

    There are provisions under fedral law where an employee meal can be taxable. WHich is why in the mid 8-’s a restaraunt I worked at quit giving a free meal as benefit but at an employee discount.

    Still sucks but its nothing new

  24. OSAM says:

    So businesses move towards simply not reporting free meals. Instead of ringing it through, you just go grab something to eat and eat it. Nobody’s any the wiser.

    We do this at work all the time. As long as you tell the boss “Hey, I’m getting this”, it’s fine.

  25. frank64 says:

    He appears to be talking about the state income tax. The IRS speciafically states it is not taxable. That won’t change. Probably not a real lot of money, but I would make a point to vote against this guy just for his thinking. Even if this tax doesn’t pass, a politician who thinks like he does is a problem.

    They only eat the food(which they probably get sick of very quickly) because they are working. The cost of the ingredients is about 20% of the retail value, so they are really not receiving the full benefit of the retail price.

    It might be a good lesson for young people though, just how bad politicians can be, and how important it is to vote. Hopefully that guy out of office?

    • ClaudeKabobbing says:

      Thats only partially true. Its not taxable if its for the convienence of the employer. If its offered has a benefit, then it can be taxable.

    • frank64 says:

      AFTER posting this I read where it is just sales tax(many others posters haven’t read the link either!).

      I don’t know what the sales tax is, but we are probably talking less than 20 cents per meal. Not something to get too upset about, but the whole idea of it is. How much would this bring in? What would the compliance be?

    • partofme says:

      They’re usually far from receiving the full benefit of retail price. When I worked in fast food, we generally made our own food on break (there were some people who only worked registers, they had others make their food). So I certainly wasn’t getting the full retail value. On the other hand, we could stack a burger with cheese and meat or drop some crushed oreos into the shake… so we got some added value there, but still nowhere near retail value.

  26. Dead for tax purposes says:

    I understand the thought behind it, the person is receiving an economic benefit, but the receipt of the benefit is a de minimus benefit as they like to call benefits that are so small they’re not worth taxing; what a bookkeeping nightmare. Also, we’re willing to subsidize healthcare and make that non-taxable on an employee’s W-2, but look out for the $2 value meal from Taco Bell, holy crap, that’ll plug the deficit in Michigan. No wonder Michigan and this country are going in this direction, we’ll stick it to people through the dumbest taxes ever so we can keep on spending more and more to subsidize all of the pet projects of these politicians.

    Perhaps becoming a CPA in the tax field was a bad call, ignorance was bliss with regards to all the tax laws!

  27. OnePumpChump says:

    So are they taxed at retail price, which would include their labor (maybe not on the clock, if they’re having lunch) in preparing it?

  28. Tim says:

    I see where they’re coming from. It’s an employee benefit, and only a very limited set of employee benefits are exempt from taxes.

    But part of me can’t help but think this is ridiculous. What about the coffee people drink at work?

    • evnmorlo says:

      Would they pay the actual value of the food received, i.e. about 10% of the menu price?

    • Gramin says:

      That’s already taxed (though in some states it is not). The employer purchased it and paid taxes on it, the provided it to the employees. Restaurants purchase food tax-free. They prepare the food and it’s taxed when sold to customers.

      • AnonymousCoward says:

        When the food is sold to paying customers, the price takes into account the amount of food the employees eat for free. If the employees were paying for their meals, the price to the customers could be lower, and the state would get less taxes from that.

        So it sounds like double taxation to me.

  29. taney71 says:

    Democrat just wanting to tax anything he can.

    • JulesNoctambule says:

      It’s far better to do what republicans do and just spend, spend, spend!

      • ktjamm says:

        I don’t think it matters anymore. Both parties are big Government. Big government means more spending, and bigger government means potentially more power for the parties involved.

        It’s in both parties best interest to grow taxes and increase spending. I’d vote libertarian if there was a snowballs chance any would get elected.

    • danmac says:

      I wish a Democrat would tax your posts.

  30. MuffinSangria says:

    This guy an idiot.

    1. Not all restaurants give employees a free meal. At many restaurants, their is an employee price for menu items or the kitchen will make a big meal for everyone, usually from leftovers they can’t sell anymore.

    2. Restaurant employees are usually given a meal because of long shifts and the inability to run out and get some food to go. They can be given a short break here and there, but as long as they have a table they can’t always leave.

    For example, someone is scheduled to work the lunch shift and then dinner that night. They stop taking tables around 2:30 so they can hopefully be done around 3:30 and have a break before the dinner shift. That last table could site there for 2 1/2 hours (every server has had that table and couldn’t get anyone to cover it). Then it’s 5 and they have don’t have time to leave before the dinner shift. It happens all the time, at least at the places I worked.

    3. Good luck enforcing this, just like servers declaring all their cash tips.

  31. speedwell (propagandist and secular snarkist) says:

    Yeah, great. People working for minimum wage or tips frequently get food stamps to afford to eat when OFF the clock. Are they going to start taxing food stamp benefits too?

  32. CharlesFarley says:

    What if celebrities had to pay tax on the free clothes the wear at televised events? Even if they return the clothes, there is promotional consideration given by the celeb when they tell the talking head at E! what they are wearing.

    hmmmmmmmm….

  33. lawgirl502 says:

    STUPID

  34. Winteridge2 says:

    You should probably interview this politician and verify that he pays taxes on all his “freebies”. No? How about does he pay taxes on his regular income? Politicians have a habit of forgetting to do that. I think he should pursue larger revenue paths.

  35. Rachacha says:

    Why stop at free meals, why not include taxing the difference between Retail price and price after employee discounts at retail stores. That is a nice chunk of change at a high end clothing or electronics store. What about people who work for auto manufacturers who can get several thousand dollars off the cost of a new car.

    Would the free meal tax also apply to employees who work in an office building working through lunch during a meeting and they are provided with a free meal voucher for the company owned cafeteria?

  36. balthisar says:

    Guys, Michigan has some real problems right now. Mostly the problem is a government that’s not afraid to us that we have to tighten our belts while government spending continues to grow. So, I’m not surprised at this latest move to charge sales tax on the value of the meals. (Actually I’m more surprised that the state and federal governments don’t consider this income, and tax on that instead. For a kid with no deductions, that’s 6% income tax versus, what?, 20% for the lowest, tax-paying bracket.)

    I’m kind of afraid to have to admit this, but the state and city government where I currently reside in Mexico handles my tax money better than my home state (the one I have to return to in the next couple of months).

  37. joako says:

    Is it sales tax or income tax? Technically you need to be paying income tax on any free meals.

    • frank64 says:

      It is sale tax, and you are wrong about employee rules and federal income tax. They are specifically not taxed. It comes under the de minimis provision.

      http://www.google.com/#hl=en&source=hp&q=de+minimis+fringe+benefits&aq=3&aqi=g10&aql=&oq=de+min&gs_rfai=CbKfz0rcjTNOnHYLygwS2w_HuCgAAAKoEBU_QotGj&fp=d2eda4910a7445ea

      Disclaimer: Again not tax advice. For entertainment purposes only.

      • frank64 says:

        After reading, de minimis may not apply, but it does come under an exception for meals provided on work premises for the convenience of the employer. Page 40:

        “Meals are excludable from wages of the employee if they are provided:
        •
        On the employer’s business premises, and
        •
        For the employer’s convenience.”

        http://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf

        De minimis does come into play with soda, coffee, donuts, and occasional lunches.

        • Tim says:

          That’s for federal income tax. This is state.

          Good to know though.

          • frank64 says:

            Yeah, the issue is unrelated to federal or even state income taxes, but it was brought up.

        • frank64 says:

          From page 41-42 of what the link I posted above: I think the word noncompensatory is important. Given that the meals are not to compensate the employees, just to keep them working.

          Meals for the Convenience of the Employer
          Meals are provided for the convenience of the employer if they are provided for a substantial “noncompensatory” reason; that is, the intention is not to provide additional pay for the employee. This determination depends on the facts and circumstances.
          The following situations illustrate meals furnished for substantial noncompensatory reasons:
          •
          Workers need to be on call for emergencies during the lunch period
          •
          The nature of the business (not merely a preference) requires short lunch periods
          •
          Eating facilities are not available in the area of work
          •
          Meals are furnished to restaurant employees, before, during or after work hours
          •
          Meals are furnished to all employees, if meals are furnished to substantially all the employees for substantial noncompensatory reasons
          •
          Meals are furnished immediately after working hours because the employee’s duties prevented him or her from obtaining a meal during working hours
          Meals provided to improve general morale or goodwill, or to attract prospective employees, are not provided for a substantial noncompensatory reason and are taxable. Reg.1. 191(a)(2)
          Example 1: Meals are furnished during working hours so that employee is available for emergency calls during the meal; for example, firefighters at the firehouse. You must have evidence that emergencies occur.
          Example 2: Meals are furnished to employees in a remote site because there are insufficient eating facilities in the area, such as a remote logging camp.
          42
          Example 3: An employer has pizza delivered to the office at a group meeting because the business requires the meeting be kept short, and there are no alternative facilities in the immediate area. Example 4: Meals are furnished by a bank that experiences highest customer demand during the lunch hour and therefore establishes a short meal period to meet this need (not to allow the employee to leave earlier).

  38. Taed says:

    By that line of thinking, many of us should be paying tax on the free coffee, soda, and even water that we enjoy at our workplace.

  39. Galium says:

    This from a person who has taxpayers pay for his meals, nice guy.

  40. Mr Fife says:

    These useless politicians are the worst scum of the Earth. They give themselves raises, refuse to pass laws so serving staff can make a living wage, they steal their tips, now they won’t even let them eat one free meal per shift. The unbridled greed, these useless elected officials need to go straight to hell.

  41. _UsUrPeR_ says:

    “… Rep Meadows also has proposed a moratorium on ‘not being a complete douche, like, all the time.’ And as a man of his words, he has started living every day as if the bill ere already passed.”

  42. jim says:

    idiots. nothing gets rung up, nothing to be taxed. morons should take the gold spoon out of their asses.

  43. teke367 says:

    Completely unenforceable. So much waste happens in restaurants you couldn’t possibly keep track if a free taco was “waste” or “employee meal.”

    Do we tax legislators on any free benefits they receive?

  44. AngryK9 says:

    That’s a politician for you. Meanwhile, he’s getting free lunches paid for by, who else, taxpayers.

  45. d00dle says:

    life insurance paid by the company up to $52k (or something, haven’t looked in 4 yrs) – free
    over $52k – taxed at value set by IRS

  46. Not Again says:

    This guy must be a democrat, right? What’s with democrats and their love affair with taxing and spending.

  47. Levk says:

    Ok.. what is 6% of 0$? hmm.. 0$? well I be happy to pay that for taxes :) also well 6% is PA sales tax well it was 2 years ago lol but hell if its taxes on 0$ they can charge 100$ and it will always be the same price. You only get tax on what you pay for…

  48. JeremieNX says:

    I really hope this joker gets laughed out on his ass.

    If I was a restaurant owner, I would charge my employees 1 cent for their meals just out of spite. Try putting a sales tax on that.

  49. FredKlein says:

    Yes, they should. And people should officially declare on their income tax returns (under ‘misc income) every penny that they find on the sidewalk, too. But it doesn’t happen.

  50. foofie says:

    Meh. I work for a cell phone company. We’re taxed at the MSRP of our fancypants employee phone plan. The free phone we get for 5 years of service? Tax on that, too. They consider it income and tax it accordingly.

  51. sopmodm14 says:

    its obvious its nickeling and diming for tax revenue

    i’d like to see them take paycuts first, before cutting anything else…..politicians want to cut security and education funding before their own pay is an insult to the the public

  52. Mary says:

    Leave film tax incentives alone people, fight about something else.

    Tax incentives are the only reason I have even the prospect of a job.

    Besides the fact that they’re apples and oranges. And who spends money getting Michael Moore to do anything anywhere near them? The man makes docs, if he’s getting ANY money from the state it’s probably in arts grants, which can and should be used for film just as often as they get used for any other artistic endeavor.

    This guy is RIGHT in the fact that taxing these meals is stupid and yet he comes across in all the wrong ways.

  53. wonderkitty now has two dogs says:

    One of the reasons people work in food service is for the free and/or cheap food. Ridiculous.

  54. quail says:

    You actually have a waste issue too. At a McD’s I worked at one semester it wasn’t unusual for the manager to offer you the burger that was to expire in 5 minutes under the heat lamp when you were heading out on your break. It wasn’t an everyday thing, but it did happen often enough.

    Even if they were to get such a crazy bill in place it would be easier to throw the food out or claim that it was “expired” trash than it would be to handle the paperwork.

  55. megafly says:

    This is a poorly written post. I was under the impression that you were talking about income tax for the value of the meals. The original article makes it clear that he wants to charge sales tax on the value of the food.

    Boo Hoo, I have to pay 5 cents for a bean burrito!

  56. panamapeter says:

    It is, at least, federal income and as been for at least 50 years

  57. TonyK says:

    sure, when they get paid a LIVING wage and not living on the generosity (or lack thereof) of customers.

  58. pf3 says:

    We have this policy in Washington it’s stupid but it really doesn’t amount to much, i remember being charged like $.40 cents for meals and learned to not mention them anymore.

  59. Chaosium says:

    “to pay for Michael Moore’s fat-cat meals”

    This was the point at which I realized that the representative has absolutely no clue what he’s talking about.

  60. brinks says:

    Wow.

    People in the food-service industry work crap hours for crap money and have little to no benefits except for a free or reduced-price meal.

    Please don’t take the one good benefit away from them.

  61. BillyDeeCT says:

    Another asshole who takes pleasure of robbing from those who don’t make a lot of money. He is probably related to the douche-bags who want to tax everybody who has employer-provided healthcare.

    How about we tax these idiots $1 for every $1 of the citizen’s money they get paid? How about the death penalty for jerks like this?