One Big Beautiful Bill

The "One Big Beautiful Bill" ; also known as the Tax Cuts and Jobs Act (TCJA), is likely to

positively impact employment in the restaurant industry due to provisions like no tax on tips and

no tax on overtime pay. These tax breaks will put more money in the pockets of workers,

potentially increasing their spending and encouraging them to take on more shifts. Additionally,

the bills focus on business growth, including 100% expensing for new factories and expansion,

could lead to increased investment and hiring in the restaurant sector.

Major impacts of the bill on industry employees:

• No tax on tips: This means tipped employees, like servers and bartenders, will keep

more of their earnings, potentially making these jobs more attractive and leading to

increased staffing or reduced turnover.

• No tax on overtime: Similarly, restaurant workers who regularly work overtime will see

a boost in their paychecks, incentivizing them to take on extra hours and potentially

filling staffing gaps.

• Business-friendly tax policies: The bills provisions for 100% expensing and other tax

relief measures for businesses could encourage restaurant owners to invest in expansion,

modernization, and hiring, ultimately creating more job opportunities.

• Economic boost: The increased spending power of workers due to the tax breaks,

combined with business growth, is expected to stimulate the overall economy, which can

further benefit the restaurant industry.

While some argue that the tax cuts could lead to increased spending that is not sustainable, the

overall impact on the restaurant industry is likely to be positive, with more money in the hands of

workers and businesses incentivized to expand and hire, according to some economists.

Other issues that may impact industry employees include:

• Increased Workload: With the elimination of taxes on tips and overtime pay, workers

may feel pressured to take on more shifts and longer hours to maximize their earnings.

This could lead to burnout and negatively impact their work-life balance.

• Job Security: While the bill aims to boost business growth and hiring, there is a concern

that the increased spending and investment may not be sustainable in the long term. If

businesses face financial difficulties, workers may experience job insecurity and potential

layoffs.

• Economic Inequality: The tax breaks may disproportionately benefit higher-earning

workers who receive larger tips and work more overtime hours. This could widen the

income gap between different groups of workers within the restaurant industry.

• Dependence on Tips: The reliance on tips as a significant portion of earnings may

continue to perpetuate the instability and unpredictability of income for workers. This can

make it challenging for them to plan their finances and achieve financial stability.

Overall, while the bill provides several advantages for workers, it is essential to consider these

potential drawbacks to ensure a balanced perspective on its impact.

The bill is expected to significantly impact restaurant owners as well by offering tax breaks and

incentives. These provisions include full expensing for capital equipment, a qualified business

income (QBI) deduction, and business interest expense deductions.

Positive effects for restaurant owners:

• Full Expensing for Capital Equipment: Restaurants can fully deduct the cost of

equipment purchases in the first year, rather than depreciating them over time. This can

incentivize investments in new equipment, renovations, or technology.

• Qualified Business Income (QBI) Deduction: This deduction, potentially worth 20%,

can lower the effective tax rate for pass-through businesses (like many restaurants) and

free up capital for investments.

• Business Interest Expense Deduction: Restoring depreciation and amortization to the

calculation of interest payment deductibility can help restaurants manage debt and make

further investments.

• Permanent Family and Medical Leave Tax Credits: Supports businesses that offer

paid family and medical leave.

• Estate Tax Relief: This can help restaurant families avoid potentially overwhelming tax

burdens when passing on their businesses to the next generation.

Overall Impact:

The bill is generally seen as a positive development for the restaurant industry, with the potential

to boost investment, improve cash flow, and enhance employee compensation. The specific

benefits will vary depending on the size and structure of the individual restaurant business. A

National Restaurant Association press release highlights that tax policy plays a major role in the

vitality of the restaurant industry, and this bill is expected to provide a significant boost.

Chris Rodrigue

Senior Operations Partner

chris.rodrigue@ssc.partners

Web: https://ssc.partners

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