Hard-fought deal may be more important for what it's not than what it is
By Kevin Drawbaugh and Kim Dixon, ReutersWASHINGTON--The fiscal cliff deal that slowly, painfully took shape in the U.S. Congress in recent days fulfills some of corporate America's tax policy goals, but leaves others unmet, including a big one — meaningful deficit and debt reduction.
January 3, 2013, 12:08 am TWN
The bill, which received final congressional approval late on Tuesday on a 257-167 bipartisan vote in the House of Representatives, would provide businesses with greater tax certainty in the short term.
About US$46 billion in business tax breaks were included in the compromise, forged by Democratic Vice President Joe Biden and Senate Republican leader Mitch McConnell and approved early on Tuesday by the U.S. Senate.
President Barack Obama was expected to sign the bill soon.
The legislation contains a long list of tax “extenders,” or temporary tax provisions that will be perpetuated for a year.
Some big-ticket items were part of that, including an extension through 2013 of the widely claimed research and development tax credit. Also included was a provision allowing businesses to write off immediately half the value of new investments, known as 50-percent bonus depreciation.
The legislation also includes a wide range of other favors for select industries, including tax breaks for railroad track maintenance, restaurant and retail store improvements, auto racetracks, film and television production, and rum production in Puerto Rico and the U.S. Virgin Islands.
Wind Power Backed
Numerous tax breaks for wind power production and other alternative energy technologies were also included.
“This agreement might not be seen as perfect by everyone, but it gives American consumers and businesses the certainty they need to put worries over this issue behind them,” said Matthew Shay, head of the National Retail Federation.
Washington's army of business tax lobbyists need not fear that the bill will leave them with nothing left to do. Just as notable as what is in the deal is what is not, especially when it comes to reducing the federal deficit.
The legislation postpones for two months the deep federal spending cuts, known as the “sequester,” that were a central worry of the fiscal cliff. That delay could set up another fiscal cliff in late February, analysts said.
Corporate America has dedicated millions of dollars in recent months to lobbying lawmakers for deficit and debt reduction, seen as crucial to preserving the nation's credit standing and financial power. The legislation would do little on that.
No 'territorial' System