Clinton’s Budget: The Economic Highlights

President Clinton has unveiled his proposed budget for fiscal 1996. Here are some of the budget highlights for businesses, investors and consumers.

Tax Credits: A new $300 credit on federal taxes for each child 13 or younger in families making up to $75,000 a year. Credit rises to $500 in 1999.

Education: A new tax deduction up to $5,000 for college or job-training courses for families with incomes up to $100,000. Deduction rises to $10,000 in 1999.

Billionaire expatriates: U.S. taxpayers who renounce their citizenship--typically the super rich--would be treated as having sold their assets and would be required to pay taxes on the presumed profits.

Defense: Spending would be cut by nearly $8 billion. The Army stands to lose two divisions, the Navy eight ships, and the Air Force one fighter wing.

Job Zones: Two new empowerment zones would be created offering generous tax incentives to employers to locate their businesses in low-income, high-unemployment areas. Los Angeles didn’t get one in the first round, but could benefit here.

Space: Research spending would be increased for a new class of smaller and cheaper space stations.

Business and Immigration: Government would hire 1,500 new Border Patrol Agents, and impose a new fee of $3 a vehicle and $1.50 a pedestrian for everyone entering from Canada and Mexico. Immigration service would expand its telephone program enabling companies to verify a worker’s documents.

Agriculture: Funding would be increased for export promotion programs. Government would spend more to finance and support U.S. farm sales abroad, and would open offices for additional agriculture attaches, including one in Hanoi.

Savings: Individual retirement account deductions--now up to $2,000 a year--would be doubled. New income limits would be $70,000 for singles, $100,000 for couples. A new non-deductible IRA would allow earnings to accrue tax-free and permit withdrawals at any time to pay for college, the purchase of a first home or extraordinary medical expenses.

Energy: Four government hydropower systems would be sold to private industry. The Elks Hills oil and gas reserve in California would be sold in 1997.

Research and development: 20% tax credit, which expires June 20, would be made permanent.

Fees: New user fees would be imposed on manufacturers of pesticides, banks enrolled in Small Business Administration programs, transactions for commodity and futures options, and medical device manufacturers. Fees could be increased for firms issuing securities.

Government Purchases: Buying procedures would be simplified and waiting periods shortened for contracts worth up to $50,000. Agencies would be allowed to use government credit cardsrather than a formal contracts to buy from “readily available sources, such as a local retailer” for purchases up to $2,500.