By Kevin Drawbaugh and Kim Dixon
WASHINGTON (Reuters) - 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.
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 $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
The compromise also makes no mention of setting up a new method of taxing profits made offshore and brought into the country by U.S. multinational corporations. Many such businesses have been pushing for a "territorial system" that would let them bring foreign-earned profits home with little or no taxation.
The White House did note in its summary of the legislation that it left "substantial scope' for "reforming corporate taxes" and cutting the corporate tax rate to make it more competitive with the rate in other industrialized countries.
That had been a key goal of lobbyists.
Guggenheim Partners policy analyst Chris Krueger said the deal was "far above what was expected" for business.
He said, "On the deficit reduction side of things, it was clearly a miss, but I suspect they will take the short-term certainty with extenders over entitlement reform any day."
On the other side of the business tax fence, advocates of closing special loopholes that help certain industries had reason to be disappointed. The legislation contains no mention of ending key tax breaks for the oil and gas business, or for senior managers of private equity firms and hedge funds.
Also left out was a proposal once trumpeted by Obama, in a piece of political symbolism, to end accelerated depreciation of corporate jets. An Obama proposal to end last-in-first-out accounting, a cost-saving business accounting method, also was nowhere in sight.
Those omissions from the compromise plan mean much work remains for those wishing to overhaul the U.S. tax code. That is a project that may or may not materialize in 2013.
(Editing by Peter Cooney)