$14,700 Cut Estimated for Next Year : Tax Bill to Save Money for Reagan

WASHINGTON —  President Reagan, who launched the tax overhaul crusade more than two years ago, would save an estimated $14,700 next year, or 12.1% of his federal tax payments, under the tax plan approved by congressional tax writers last week.

The estimate, prepared Friday by the Washington office of Touche Ross & Co. at the request of The Times, shows also that the President stands to gain even more once the bill is fully implemented, saving $30,671, or 25.2% of his 1985 payment of $121,456. Reagan reported an adjusted gross income of $394,492 in 1985.

Touche Ross compared what Reagan’s tax bill would be for 1987 under current law and under the new tax proposal. It calculated also what Reagan would pay once the plan is fully in place, which would differ slightly from the tax system proposed for 1988 because a few deductions would be phased out over several years.

1985 Return Used

The calculations are based on the 1985 tax return Reagan disclosed in April and assume that his income and expenses remain the same through 1988. They highlight the dramatic tax savings that about half of the richest taxpayers in the country can expect under the new tax plan.

The Reagan family, like many wealthy taxpayers who neither invested heavily in shelters nor relied substantially on capital gains, would benefit dramatically from the drop in the top tax bracket from 50% under current law to a maximum 38.5% in 1987 and to a nominal top rate of 28% in 1988.

By contrast, an equally large number of the wealthy will face big tax increases next year.

Of the 646,000 households with total incomes of more than $200,000, congressional tax analysts estimated that 327,000 can expect to pay more in federal income taxes in 1987, compared to 319,000 households that should receive a tax cut.

Average Figures

In 1987, taxpayers with total incomes of more than $200,000 would face an average tax hike of 11.4%. But, in 1988, when the rate drops to 28% on the highest income levels, such wealthy taxpayers should receive an average tax savings of about 2.3%.

As Reagan’s return illustrates, such averages obscure the wide variation in the way the new tax code would treat different taxpayers.

The biggest change for Reagan would be the loss of the capital gains tax break, which allows individuals to pay taxes on just 40% of the profits from investments held for more than six months. Last year, Reagan reported total capital gains of $47,068 but was required to pay income tax on just $18,837 of the profit because nearly all of the gain came from long-term investments.

Once the plan is fully implemented, Reagan would be required to pay at his 28% rate on the full profit of $47,068.

More Taxable Income

Like all taxpayers, the Reagans would also have an increase in taxable income because of the loss of deductions for sales taxes, consumer interest and miscellaneous deductions. Total deductions for Reagan were $110,534, but the deductions would fall to $102,694 next year and to $98,444 after the plan was fully in effect.

Under current law, Reagan’s taxable income would be $284,401. It would climb to $320,489 once the plan was fully implemented.

Reagan would no longer receive a sales tax deduction of $1,308. Next year, he would only be able to claim 65% of a consumer interest deduction of $7,325, and, once the plan was fully in effect, he would no longer receive any consumer interest deduction. The miscellaneous deduction, which totaled $40,231, would also be cut back by $8,459 because of a proposed change in the law that permits taxpayers to deduct only such expenses that exceed 2% of their adjusted gross income.

Like other affluent taxpayers, the Reagans would also lose all the benefit of the bottom 15% tax bracket and the $2,000 personal exemption. The new tax plan contains a phase-out of the low 15% tax rate on the first $29,750 in taxable income for couples whose taxable incomes exceed $71,900. The Reagans would also not benefit from the $2,000 personal exemption for taxpayers and their dependents, because it would be phased out for couples with taxable incomes of more than $149,250.