Among the players in President Ronald Reagan's $41.4 billion budget-slashing game, Wallace and Mary Green of Northwest Washington are winners.
For many working-poor Americans, Reagan's program is likely to bring hard times. But for the Greens and millions of other middle- and upper-class taxpayers, the Republican administration's economic package will help, not hurt, their budgets.
Reagan's call for a 30 percent tax cut during the next three years will cut the Green's taxes about $500 each year. His budget cuts, the Greens believe, will slow inflation. And, most important, his plan will not meddle with the projected $214 billion in tax breaks that will go to numerous individuals this year.
And that means dollars to the Greens.
Last year, the couple earned $54,000 -- enough to put them in the 50 percent tax bracket. But the Greens, who still are computing their tax bill, plan to claim at least $24,000 in tax deductions and credits, cutting their taxable income to about $30,000, dropping them into the 37 percent tax bracket. The couple's tax bill will be about $6,500, an IRS spokesman said.
Reagan critics say the president should have reduced tax breaks along with government programs if he really wanted his economic program to affect American's equally on all income levels, as he has said it will. Tax deductions and credits, critics claim, are actually government subsidies just like food stamps. Administration officials disagree, saying tax breaks are important tools for spurring certain types of economic growth such as home buying, shipbuilding and oil exploration -- which translate into a better economy for all.
A look at the Greens' Finances shows just how important tax deductions and credits have become to most middle- and upper-class Americans and why suggesting cuts in them would, as Green said, "not be politcally popular."
"I support what he's doing," says Green, a senior analyst at Mark Battle Associates, a downtown consulting firm. "Absolutely. I would have done the same thing [if president]."
After listening to Reagan's speech, Green says the only impact he'll feel is if his consulting work falls off because of government program cuts. Otherwise, Green says Reagan's program only will produce inconveniences, such as higher airline fares and fewer public television programs.
"You could classify us as people who are very conscious of what any type of transaction will do to our taxes," says Mary, a former special education teacher who now sells real estate and is a management traineee at a local bank. "If something is going to affect our taxes, we really look it over."
The Greens pick tax write-offs as carefully as they choose new shoes.
"We take out a big loan every couple of years whether we need it or not," Mary explains. "If we borrow $5,000 this year, by the time we pay it back - even with interest - we have made money. First, there's the tax deduction, but also the money which we borrowed is worth more than the money that we pay back because of inflation. So you might as well buy something really nice this year and end up ahead."
From November until March, the Greens say, they allow their credit card bills to grow unchecked. "We pay five months' finance charges, which we can deduct, and then pay it [the bills] with our income tax refund," Mary explains.
The Greens also share the inflation psychology against saving money that Reagan says must change if inflation is to be beat. "We're not savers," Mary admits. "Why put a couple thousand in the bank? You have to pay tax on the interest it earns and the inflation rate is higher than the interest you are earning. You are losing money both ways. It just doesn't make sense."
The Greens would rather buy antiques than keep a big bank account. "I bought a 1947 Ford pickup truck," says Wallace. "I'll make a good profit when I sell it and it's not a tax problem."
Like most taxpayers, the Greens have a major tax deduction -- $7,000 -- for interest they paid on the mortgage for their $125,000 house on Van Buren Street NW.
"When I was growing up, the big dream among low-income people, like my father, who never made more than $6,000 per year, was to pay off the house mortgage," says Wallace. "Now, the objective is not to buy a house and own it for 30 years, but to move on and take advantage of the market and tax breaks."
The Greens claimed another $7,000 deduction for mortgage interest on rental property they own. Besides the interest, the Greens can claim deductions for depreciation of the buildings and the cost of repairs.
At one unit, the rent is $175 per month. Upstairs, the rent is $100. The Greens keep the rent low because they like the tenant. She's an older woman with a limited income. But the Greens also know that raising the rent would push them into a higher tax bracket.
"The tax angle always is on your mind," explains Mary.
As she talks, 2-year-old Jewell, the Greens' only child, plays on the polished wood floor of the spacious, plant-filled living room where framed prints of Booker T. Washington and Frederick Douglass decorate the walls. Jewell, too, is $1,000 tax deduction, just as child care for her is a tax-lowering credit.
The Greens own a 1976 economy car, but the sparkling BMW which they drive is leased. Leasing, they believe, gives them a better tax advantage, because Mary uses the BMW as her real estate work car. She also deducts the cost of keeping an office at home and some of the family telephone bill as a business expense. Last year, the couple donated $1,900 to 25 tax-deductable agencies, many job-related.
"We live a comfortable life," says Wallace, sitting in an oversized, lavender antique chair. "But we have money worries just like everyone else."
Finding a nursery school for Jewell is a problem, for instance. "In our income bracket we can't send her down the street. You have to put her into something that probably will cost about $3,000 per year," says Wallace. Of course, that, too, could be a tax write-off.
Neither Mary nor Wallace come from wealthy families. He was born in Washington, one of five children. Mary was born in Ahoskie, N.C., one of four children.
Before the November elections, the Greens pictured Reagan as a "right-wing reactionary" who did not care about minorities or the poor. Staunch Democrats, they worked to get Carter reelected. But now, they are optimistic about Reagan.
"He has been surprisingly receptive to minorities," says Wallace. "As to whether or not, the cuts are going to make life more difficult for poor people, well, I think it's a little early to tell."
"The poor must be protected, but business also must have enough incentives to lift the burden of poverty off government by providing jobs," Wallace says. "It's not going to be easy."
"I have mixed feelings," says Mary. "I wonder how much study he put into the cuts. "I'm concerned about what those people are going to do. What is it going to mean, in regard to crime and for people like us, who they might perceive as having more than they have, and if they're not going to get it, then here we are and they are going to come and take it one way or the other from us. That's my concern, what are they going to do?"