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0 a. :Ft 0 0 .c a. spoke at a “town hall forum” on welfare reform in Sacramento, Reagan was drawn into a shouting match with welfare recipients who attempted to give him an award as the “highest paid welfare recipient in the state.” Eventually Reagan called another news conference, and sought once and for all to put the matter to rest: “Ladies and gentlemen,” he began. “I have paid every tax obligation that I had. I issued a statement in writing. Everything you need to know about my tax status is in that statement. I have paid every tax that I owed.” Subsequently the California Field Poll showed that Reagan had suffered a slump in popularity because of the way he handled the controversy. No one ever figured out exactly what Reagan’s “business reverses” were, although reporters from both The New York Times and the Fresno Bee discovered that the governor had invested in a herd of bulls, managed for him by a Kansas City firm that specialized in helping people with high incomes avoid or delay paying taxes. Years later, Reagan said the herd was part of a $10,000 investment he made because he wanted to own cattle. “I knew the guy who does this, bought this herd of bulls,” he said. “What you do with them, they’re out on lease for breeding. I always made a profit on them. I made a little money.” The tax controversy was revived in Reagan’s 1976 presidential primary campaign against Gerald Ford. Initially Reagan resisted reporters’ efforts to get him to disclose financial holdings, claiming that he had no way of knowing his assets since they were in a blind trust administered by William French Smith. But after Ford made his holdings available, Reagan, on the advice of his political advisers, released a financial statement showing his net worth as $1.4 million. He estimated earnings of over $282,000 in 1975 after leaving office as governor. Rather than clarifying matters, this statement immediately produced more controversy. A major component of Reagan’s holdings at the time was the undeveloped ranch land in Riverside, which he valued at $417,500. Real estate brokers told reporters that the land was grossly undervalued. They said at least 300 acres of the property were worth $2000$2500 an acre. \(As noted above, the land brought $856,500 when Reagan sold it When Reagan’s net worth was made public, Eileen Shanahan wrote in The New York Times that Reagan “almost Reagan, 1980. certainly paid no federal income tax in 1970 despite an income in excess of $73,000. In at least two other recent years he also appears to have paid less federal income tax than most people with a small fraction of his income.” Analyzing Reagan’s sketchy disclosures, Shanahan found he had made investments that were specifically designed for their tax-avoidance potential. “In addition to his apparent complete avoidance of both federal and state income taxes in 1970, Mr. Reagan, who is assumed to file a joint tax return with his wife, appears to have paid only about $2,200 in federal income taxes in 1971,” Shanahan wrote. “This is about the same amount that a typical married couple with an income of $16,000 would have paid. The Reagans had an income in 1971 that exceeded $87,000.” “In 1973, with an income of more than $110,000, they appear to have paid around $7,800 in federal income tax or about what a typical couple with an income of $36,000 would have paid.” And in 1972 and 1974, the Reagans appeared to have paid a federal income tax that was only about half as large as that paid by typical taxpayers in their over-$100,000 bracket. In 1975, the only year for which Reagan actually disclosed his federal income tax payments, he paid $65,000 on an adjusted gross income of $252,000. That was about $20,000 less than the average tax paid by those at that income level. The New York Times asked the Reagan campaign for more specific information on which to make a fuller analysis. Reagan refused. Shortly after Shanahan’s report was published, Rea gan aide Peter Hannaford denied her conclusions, but refused to say how much federal income tax Reagan had paid. “There’s not one of their figures that’s correct,” Hannaford said. “Their guesses as to what he paid are simply that, and they’re not correct.” During the 1980 presidential campaign, Reagan made public copies of his 1979 federal income tax returns, but issued no statement of net worth. “Actually, there’s no figure for that,” William French Smith said at the time. Since then, the Reagans have released their federal income tax returns regularly. Most of the president’s assets are . , . -..;..—..:.. ,–. .. , ei ‘ .4, . ,,… rte’ , ,, ? -.; ‘….., 10’…,1:4!,.,1 -nu 4’. ti . tip f p ” 4 ‘-: . . 44 !.1 ,r i ”’ ‘ i … . ‘. 41’ . :. -;1 “”4 ‘,1… li s ‘ :1_ ze .+-:—. –1 ‘,.. id f c.,,i ;. I , 5″,”, 1`.1 / p 10 _ ‘,,. .e .4%., , “1 r t. , ,,_ . 6 . .—.-7-..- . 4.0LC ‘ Don’t Get Caught On The Bench The 1984 Presidential series is really heating up, and we’d hate for you to be out in right field. For a spirited account of the players and strategies, thousands of readers from all over Texas turn twice a month to the Texas Observer. And you can be one of them. Here’s how. Yes, I want to join the Observer team. 11.1111l :MLitt: , elly SUE,: /lp The Texas Observer 600 West 7th Austin, Texas 78701 THE TEXAS OBSERVER 13