Clinton pushes college tax credit For first 2 years, eligible families could get $3,000

WASHINGTON — WASHINGTON -- President Clinton, keeping active in the election year tax-cut derby, yesterday proposed a tax credit worth $3,000 during the first two years of college for students from families earning less than $100,000.

"Today, more than ever before in the history of the United States, education is the fault line -- the great Continental Divide -- between those who will prosper and those who will not in the new economy," Clinton said. "This is about far more than economics and money. It is about preserving the quality of our democracy."


The proposal, which is given little chance of approval by a Republican Congress in this election year, could hasten a bidding war on tax cuts between Clinton and his Republican rival, Bob Dole. At the same time, both men vow that they are committed to erasing a budget deficit that could be worsened by tax cuts.

Dole has been under pressure to propose his own election-year tax cut, with some aides urging him to offer a 15 percent across-the-board income-tax reduction.


"This is not a wild across-the-board tax cut," Leon E. Panetta, the White House chief of staff, said of Clinton's plan. "This is a responsible tax cut, targeted toward education."

White House policy aides said Clinton's proposal was meant to supplement the administration's earlier push for a $10,000 tax deduction for college tuition, although families would not qualify for both at the same time.

The plan, announced yesterday by the president in a commencement address at Princeton University, is a straight tax credit of $1,500 for the first year and another $1,500 during the second year, provided that the student maintains at least a B-minus average and is not convicted of any drug offense.

That kind of money would not go far at Princeton, where tuition, fees and living expenses approach $30,000 a year. But it is aimed at a group of potential students -- and voters -- whom White House planners believed they overlooked in their earlier proposal: community college students.

"Two years of college means a 20 percent increase in annual earnings," the president told the graduating seniors. "People who finish two years of college earn a quarter of a million dollars more than their high school counterparts over a lifetime."

Georgia model

The program is patterned after a statewide effort launched three years ago in Georgia. There the cost is financed with proceeds from the state lottery.

To pay for the Clinton plan, Gene Sperling, a budget adviser, outlined a series of proposed increases in corporate taxes and user fees, including raising the airport fees for international passengers from $6 to $16.


Republican leaders avoided criticizing Clinton's proposal directly, but they did poke fun at him on the overall issue of taxes.

Campaigning in Virginia, Dole noted that Clinton had promised middle-class tax cuts in 1992 as well, but after he was elected successfully pushed through tax increases instead.

Not until after Democrats lost both houses of Congress in 1994 did Clinton propose tax cuts.

"There he goes again," Dole said, borrowing Ronald Reagan's famous 1980 put-down of President Jimmy Carter. "Who knows what taxes he'll increase if he should be re-elected?"

House Speaker Newt Gingrich, in a session with reporters, added: "I love watching Bill Clinton in an election year. Every election year, he's for tax cuts."

Steve Forbes, a Princeton alumnus who ran against Dole in the primaries on the issue of a sweeping flat tax, had another objection to Clinton's proposal: It does not go far enough.


"We need big strides," Forbes told reporters at Princeton. "Not baby steps."

But if the president's proposal is considered only an incremental change in tax reform, it represents a major shift in the thinking of how the government views education.

Currently, education, from kindergarten through 12th grade, is considered a state obligation, with further studies or training the responsibility of individual students.

Cultural change

Clinton aides said the president favors a sweeping cultural change -- to view the first two years of post-high school education as essential for a successful career.

"I believe the clear facts of this time make it imperative that our goal must be nothing less than to make the 13th and 14th years of education as universal to all Americans as the first 12 are today," Clinton said yesterday.


Although its details were not made public at the time, Clinton first raised the tax credit idea this past winter, during his unsuccessful budget negotiations with Republican leaders, including Dole. The Kansas Republican recently resigned from the Senate and his post as majority leader.

On Feb. 3, during the primaries, Dole alluded to the proposal during an appearance in Iowa -- a fact White House aides were eager to share with reporters.

"I might say on the junior college level, the community college level, in all these 50 hours of talks, President Clinton had an idea that was pretty good -- and that was credits for two-year college students," Dole said then.

Pub Date: 6/05/96