Reap Benefits of Lower Brackets Under New Law : Reagans’ Income Up, Taxes Down

SANTA BARBARA —  President and Mrs. Reagan’s tax bill was almost $6,000 less for 1987 than they paid for 1986, although their income increased by about $9,000, according to tax returns made public Friday.

The Reagans, who met Wednesday with their accountant, Roy Miller, to sign the returns, paid $86,638 in taxes for 1987--the first year that a tax revision measure championed by the President became effective--on an adjusted gross income of $345,359.

In 1986, their adjusted gross income was $336,640, and they paid $92,460 in taxes.

The Reagans lowered their taxable income to $263,767 by claiming $77,792 in itemized deductions and $3,800 in exemptions.

Sold Japanese Drawings

Besides the $200,000 presidential salary, the Reagans received $54,178 in interest income from a variety of bank accounts, a refund of $5,987 on 1986 tax payments, a capital gain of $14,858 from the blind trust into which the President’s investments were placed when he took office in 1981 and $31,350 from the sale of three drawings by the Japanese artist Fojita. Mrs. Reagan inherited the artwork from her mother, Edith L. Davis, who died last October.

The President received $29,711 in pension payments from the state of California, based on his eight years as governor, and he and his wife were paid $1,807 in a variety of royalties--Mrs. Reagan for reruns of 1986 television appearances on “Diff’rent Strokes” and “One to Grow On” and the President for an appearance on the 25th anniversary production of the “Tonight Show” and from his autobiography, “Where’s the Rest of Me?”

For the first time, the tax return discloses the President’s nontaxable income. He was paid $91,807 from his blind trust and investments in municipal bonds and other sources of nontaxable income, White House spokesman Marlin Fitzwater said.

Thus, the Reagans’ overall income would appear to be greater than $430,000.

Effects of Crash Unknown

Because the holdings of the blind trust are not disclosed, Fitzwater said, it is impossible to determine whether the Reagans lost money during the stock market crash last October.

The Reagans claimed $25,407 in charitable contributions, including a donation of $11,312 to the President’s alma mater, Eureka College in Illinois. In 1986, they claimed charitable contributions of $30,487, including an $11,500 gift to Eureka.

This year, they listed $14,095 in miscellaneous cash contributions, each less than $3,000. The tax return does not require such contributions to be listed individually, but Fitzwater said that proof of the contributions would be required during an audit, and that the Reagans’ returns are audited by the Internal Revenue Service each year.

TV Royalties Given Away

Included in the contributions, he said, were the television royalty payments they received, with Mrs. Reagan contributing her $214 in earnings to the Community Foundation of Greater Washington, which is involved in, among other things, drug abuse work. The Reagans’ other deductions include $2,673 for interest paid on a long-held life insurance policy loan and $21,394 in state and local income taxes, real estate taxes on his Santa Barbara ranch and $234 in personal property taxes levied on ranch vehicles, including a Jeep.

They claimed $28,318 in miscellaneous deductions, based on legal fees and other fees associated with their blind trust and the administration of other assets.

Seymour Neuman, a Beverly Hills certified public accountant who was given a summary of the Reagans’ tax return, said that they were able to pay less in taxes in 1987 than in 1986 “because the rate structure is lower--but that is not the experience in most of the country.”

“The upper echelon is experiencing a tax reduction and the lower echelon is experiencing a tax reduction, but the people in the middle are generally paying more,” Neuman said.

Paid Top Rate

According to the White House, the Reagans paid part of their 1987 taxes at the top rate--38.5%--mandated under the new tax law. For 1986, they had also paid some taxes at the maximum rate, which was 50%.

On the 1987 return, they claimed a refund of $10,754--to be credited to their 1988 tax bill--based on federal income tax withholding of $67,392 and estimated tax payments of $30,000.

The tax return, prepared by the Los Angeles law firm of Gibson, Dunn & Crutcher, was mailed to the Internal Revenue Service Center in Fresno, according to the White House.