The Tax Volunteer

"We deal in this room with appearances as well as reality." This was Press Secretary Jody Powell's frank explanation in the White House press room last week of why Jimmy Carter had decided to pay $6,000 in federal taxes on his income in 1976 when he actually owed nothing at all.

Carter and his wife had twice obtained an extension from the Internal Revenue Service on the deadline for filing their 1976 return as they pondered the politically embarrassing fact that despite a gross income of $54,934.79, they would have to pay, well, peanuts to the IRS--only a self-employment tax of $857.16 for Social Security.

In 1975, according to a return being audited by the IRS, they paid income taxes of $17,484. But copies of their 1976 return made public by the White House showed that the Carters' tax bill dropped last year because of two factors:

1) Carter's share of the income from the family peanut business--owned jointly with Brother Billy and Mother Lillian--declined because of last winter's severe cold. The President's cut dropped to $46,555.17 from the $119,244.47 paid to him in 1975.

2) The family corporation's investment in a peanut storage facility and additional equipment for shelling, drying and handling peanuts. Carter's share of the expense was $208,649, which gave him a $11,675 investment credit that he used to reduce his tax bill. Legislation allowing the credit was first enacted in 1962 to spur business investment in plant and equipment. Last year 1.6 million taxpayers made use of it to reduce their payments by $3 billion.

Last week in a letter to the IRS, Carter said he and his wife had decided to make a voluntary payment amounting to approximately 15% of their net taxable income "because of my strong feeling that a person should pay some tax on his income." White House Counsel Robert Lipshutz explained that Carter adopted the 15% figure because it is the minimum required by law on income such as long-term capital gains.

Carter's tax bill might have been much higher--a total of $29,083--if he had included the nearly $70,000 in royalties earned in 1976 from his autobiography Why Not the Best? Powell explained that the money was not actually paid to Carter until January, so the IRS had concluded that it should be reported on his 1977 return. If that should result in any tax saving for Carter, said Powell, the amount will be paid voluntarily by Carter to the IRS. Carter plans to donate all of the royalties accumulated after May 1976 (about $49,000 so far) to the Carter Foundation for Governmental Affairs, which he eventually will establish to benefit students of government and political science.

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