The Los Angeles Times from Los Angeles, California • 34

34 Port I Oct 16, 1977 loS angclf Cimt 2 Prkts Good thru Tuts Oct. II mm e. im mm mi i rnn. AZmLWM JG AND DlSCOUNTSTK 1 i I rm' TTT-nn-T ii i in mi iiiiti i ii -t i 1 1- i i mi i mm. -n -n i -i i fffllC yu 3 IM I InnlPTflM 1 Co) FIAT rAI riitvimcc 0 i AMERICAN I HADE 1 LARGE FAMILY SIZE FUUIEDSIZE 449 FIAT 01 FITTED -QUEEN SIZE 99 FIAT OR rlTTtD 115-INCH SURFACE Two-sided broiling without muss or fust.

Cooks steaks, 'burgers, hot dogs, bacon, seafood, chicken grills vegetables, sandwiches. Grease drains naturally from removoble, immer-sible grids for easy cleaning. 18-70 faster than range broiling. Saves electricity, kitchen stays cooler you save to RING SIZE T99 It Takes Money to Get Break on Taxes Continued from 33rd Page The family wound up with a tax bill of $2,450, or 11 of their gross income. The lawyer came away with a tax payment of $920, or 4 of the gross.

The family was even worse off a year earlier. Up to that point, they had not purchased a house and thus did not have much in the way of itemized deductions. As a result, they paid nearly the same amount of income tax on an income $4,000 lower in 1975 than in 1976. What brings about the dramatic contrast between the family and the lawyer is the lawyer's investments in a pair of rental properties. By socking his savings into the apartment units, the lawyer was able to produce a $9,000 loss he could deduct from his $22,300 income.

It must be said that some of that loss was out of his pocket. But $3,800 of it is what could be called a fictitious loss, albeit legally fictitious. It is depreciation, the theoretical decline in value of the properties as they get old and deteriorate. Actually, of course, it has been a long time since real property prices have declined, so it is a loss only for tax purposes. Meanwhile, the $9,000 overall loss cut his income taxes by nearly $2,400.

So his out-of-pocket loss was only $2,800. That doesn't concern him much. It is a small cost compared with the appreciation he is experiencing on the properties. In fact, he sold one of them this year for $65,000 more than he paid for it four years ago. And that $65,000 is not taxed the same as his salary.

He will pay a much lower capital gains tax on it. Moreover, he pays no tax on the appreciation of the other property until he sells it. "Thanks to the laws, you can't do that well at so little cost in almost any other investment," he observed. Here, in some detail, is a comparison of the two middle-income tax returns: Family Lawyer Gross wages $21,500 $22,300 Interest on savings 500 0 Total gross income 22,000 22,300 Adjustments deductions 5,500 15,900 16,5006.400 Exemptions 3,000 750 Taxable income 13,500 5,650 Tax Paid 2,450 920 of gross income 11 4 The upper-income family is largely in that bracket because of two fat paychecks. The husband is a business executive, the wife a doctor.

They have one child. Their combined income in 1976 was $79,000. Actually, the wife collected $100,000 out of her practice, but office expenses, which are deductible, took $68,000 of that Other business expenses and losses on tax-shelter investments trimmed the couple's adjusted income to $67,000. Itemized deductions and exemptions for the three family members reduced taxable income to $49,750. The family paid a tax of about $16,300, or 21 of their gross income.

One of the major complaints about the tax laws is that they are not as progressive as they should be. Instead of climbing truly to the upper percentage 50 for salaries and 70 for some other kinds of income the average tax rates actually paid run just under 40, even for taxpayers in the income bracket Moreover, if certain other income, such as company-paid benefits and capital gains, are fully added in, the real tax rate paid reaches only 36 for taxpayers making from $200,000 to $500,000, and even drops a little for those in the $1,000,000 category. Social Security taxes tend to flatten the rates still more. When these taxes are added in, the tax rates for lower-income brackets come closer to those of higher-income groups because Social Security is collected only on income up to $16,500. Looking at the taxpayers interviewed by The Times, the taxes paid, including Social Security, amount to the following shares of gross income: Lower ..12 Middle (family) 16 Middle (lawyer) 8 Upper 23 Of course, there are other taxes to pay, including sales and property taxes.

These boost the taxpayer's bill still further. Hence, while the lower-income woman pays 14 of her income to some level of government, the middle-income family pays 24, the lawyer 17 and the upper-income family 28. There was one more fact that came out of interviews with the four taxpayers. They all could remember what they paid for cars and other items going back a few years. No one could remember, without checking, how much they paid to Uncle Sam last year the biggest item in their budgets.

Space Shuttle 'Piggyback' Pilot, Aerospace Executive Honored The pilot of the space shuttle's carrier aircraft and a former test pilot who is now vice president and director of McDonnell Douglas Corp. Saturday received the two highest awards given annually by the Society of Experimental Test Pilots. Fitzhugh Fulton Jr. received the Iven C. Kincheloe Award as test pilot of the year for piloting the Boeing 747 that carried the NASA space shuttle during recent flight tests.

Fulton is a civilian test pilot for NASA's Dryden Flight Research Center. Robert C. Little, vice president and director of McDonnell Douglas received the J. H. Doolittle Award for excellence in technical management of aerospace technology at the society's 21st annual banquet Bonn Foreign Minister Ends China Visit rem Reuters SHANGHAI West German Foreign Minister Hans-Dietrich Genscher left Shanghai to return to Bonn Saturday night after a four-day visit to China.

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