THE CLINTON ECONOMIC PLAN : How Business and Investments Will Fare
The following is a look at some specific ways business would save money or pay more if President Clinton’s economic plan is enacted into law.
Good News for Business
Proposal: Temporary investment tax credit for large business and permanent credit for small corporations.
Result: Tax savings of $28.9 billion between 1993 and 1998.
Proposal: Enterprise Zones credits.
Result: Tax savings of $4.1 billion.
Proposal: Permanent extension of research credit.
Result: Tax Savings of $9.6 billion.
Bad News for Business
Proposal: Energy tax on oil, coal, natural gas and nuclear power.
Result: Raises tax revenues of $71.4 billion
Proposal: Hike corporate tax rate to 36% from 34% for taxable income above $10 million.
Result: Raises $30.6 billion between 1993 and 1998.
Proposal: Limit tax credit for corporations operating in Puerto Rico.
Result: Raises $7 billion.
Proposal: Tighten foreign tax credit for multinational oil companies.
Result: Raises $1.8 billion.
Proposal: Toughen tax collection for foreign firms operating in U.S.
Result: Raises $3.8 billion.
Clinton’s economic plan is going to help some investments while hurting others. Here are some possible winners and losers:
Investment Winners
Tax-free municipal bonds. These will gain popularity as a way to shelter income from higher taxes.
Treasury bonds. If Clinton succeeds in cutting the deficit, the government will issue fewer bonds, which should boost the value of existing bonds.
Whole life insurance. Life insurance contracts that allow investors to accrue interest on a tax-deferred basis are expected to gain popularity as a tax shelter.
Technology stocks. Software, hardware and semiconductor companies are expected to benefit from research and investment tax credits.
Construction company stocks. Firms that build roads and infrastructure should get added work.
Health maintenance organization stocks. HMOs, which provide health care at a low cost, are expected to benefit when Clinton unveils his national health care proposals later this year.
Single-family homes. Higher taxes increases the value of the mortgage interest deduction.
Investment Losers
The dollar. If U.S. interest rates and the economy tumble, so likely will the dollar as foreign investors seek to invest in other countries.
Commodities. Lower inflation, a likely scenario if Clinton tax hikes slow the economy, will hurt prices of things ranging from sugar to wheat.
Retail and auto stocks. Consumers will have less to spend, so they’ll scale back purchases, especially such big-ticket items as auto.
Drug stocks. The government wants to limit their prices.
Defense stocks. Clinton’s planning to cut back defense spending.
Transportation stocks. The energy tax will hit airlines, truckers, railroads and others transportation-related companies.
