according to US tax expert Mr. John McDermott.

But Mr. McDermott is warning US companies with bases in the Island to keep a close eye on certain aspects of the President's tax policies.

American companies could find themselves with hefty bills when they return home if more than a quarter of their income is raised through business in the Island.

And benefits will be offered to companies to carry out their business in the US mainland according to Mr. McDermott.

But any great exodus from Bermuda of international business is unlikely, despite fears early in the Presidential campaign.

A Ronald Reagan supporter Mr. McDermott, former director of the International Tax Institute in New York, was talking to the International Fiscal Association at the Royal Bermuda Yacht Club.

He described both Reagan and Clinton as similar to the lead character from the movie "The Music Man.'' This means that both men were able to sell something to the American public which nobody believed they would buy.

In Clinton's case it is taxation but Mr. McDermott pointed out that this was to redistribute cash across the whole spectrum of the United States population, a result which Reagan had failed to achieve.

He said that Clinton has been helped by the effects of the recession which left many middle class Americans jobless and unable to provide education and satisfactory health care for their children.

The President's plan means tax increases, slashing of the defence budget, and radical changes to the health and education systems.

Mr. McDermott said that fears that Clinton would be aggressive towards international trade have proved unfounded except in certain cases where he feels countries have not played by the rules.

But he is offering benefits to companies who decide to concentrate their businesses in the US.

Mr. McDermott said: "This legislation will not see any targeting of foreign companies, but there will be renewed targeting of US companies operating overseas.'' He said that insurance companies in Bermuda should not worry about the plan although it could change in the future.

He said: "There should be little effect on Bermuda but American controlled businesses will have to be careful. Foreign owned interests are not under any great threat.'' Fears that cuts in the US Forces would mean the closure of the US Naval Air Station in Bermuda were not addressed by Mr. McDermott, but he pointed out that there will be up to 25 percent cuts in the military budget by 1997.

There could also be problems on the horizon for Bermuda in Clinton's plans to encourage research and development to be carried out on the US mainland. Many Bermudians projects have been US sponsored in the past.