Four taxpayers talk about spending, saving, and tax cuts

Tomorrow, the last installment in President Reagan's three year, 25 percent personal income tax cut takes effect. For the nation as a whole, the final 10 percent reduction means $30 billion more in taxpayers' pay packets. But what does it mean for individuals? Four taxpayers give their views.m Gwinnett County, Ga.

Six Black Angus calves, just a week old, lie in a small pen in the tin-roofed , crowded barn as a hot breeze blows across the surrounding pastures. Horace Lovin peers at them across the top of the neck-high gate to the pen.

A few minutes later, walking across a lot outside the barn, he stops in midstride and explains why the Reagan tax cut is making little difference to him or the farm he owns here with his son, John.

''There's not enough [savings from the tax cut] that you can tell . . . that I can put my finger on,'' he says. If there were large, identifiable savings, he says he would apply them to ''build a new barn or buy another good cow.''

Questions of the effect of the tax cut are swallowed up on a small (175 acres) farm like this by more pressing issues, which he cites: high county property taxes, increasing taxes for schools in this fast-growing county near Atlanta, and rising prices for farm equipment.

Later, sitting at a picnic table in the breezeway of his son's house, he says that tax cuts combined with rising federal deficits worries him: ''You just can't spend more money than you take in. One of these days there's going to be a reckoning.''

Meanwhile, he is happy. The farm income is not that high, he says, but ''money in life is the least thing.'' He enjoys the farm. So does his son, who says: ''Being happy with what you're doing is the main thing.'' Boston

''When I was notified of the tax cut, my basic reaction was 'big deal,' '' says John, a 29-year-old commercial lending officer at the Bank of Boston.

Enjoying a summer evening on a Boston roofdeck, John tips back his chair and talks of growing up in a Boston suburb and going to Ivy League undergraduate and graduate schools. His $33,000-plus salary at ''The Bank'' helps him with ''the most important thing right now,'' which ''is to be free of debt.''

''As an individual who has just been told, 'You've got an opportunity to make another 10 percent,' against what the government normally takes, I'd just as soon apply that to getting out of debt for grad school and my car. I don't want to go out and buy anything.''

Is he going to set the extra 10 percent aside?

''Absolutely not,'' he says. ''And I would be very hard pressed to think of any one of my friends as well . . . who sat down and said, 'Ah ha! I've got 10 percent more income' and allocated that 10 percent to consumer items - which is what Reagan was looking for.

''I'm sorry, people don't think that way. Corporations may, in a macro sense. But your average daily Joe earning, as a majority of people do, in the range of car's gas tank twice.''

Was the Reagan tax cut a good idea?

''Yes - but that's not a simple question. For the individual there's a little bit more cash to be able to go out and buy some clothes for his kids . . . that's good. I think the individual consumer is entitled to a little bit of a break.

''On the other hand, it's robbing Peter to pay Paul. You're putting money in the consumers' hands and who knows what they will do with it. . . .

''The whole thing was a classic political move,'' John says.

''It would have been an absolutely classic act of leadership if Reagan had said, 'Look, you're not going to get a tax cut. We are going to cut back expenditures because this country has overspent.'' Beverly Hills, Calif.

Benjamin Norton and his wife each drive a Cadillac and live in a tile-roofed, stucco house on Rodeo Drive, within walking distance from Beverly Hills' most glitzy boutiques.

Three years ago, as a business consultant with interests in downtown Los Angeles real estate, Mr. Norton was paying out more than 75 percent of his income in state and federal taxes.

So he quit.

''I lost my incentive,'' he says. He ran for civic office and became the unpaid mayor of this conspicuously luxurious town. If the tax cuts enacted with President Reagan's Economic Recovery Tax Act of 1981 had come earlier, he might well have stayed in business full time.

Now, he says, ''I'm not unhappy paying 55 percent [his present state and federal tax rate].''

Like many moneyed people, he hasn't been conscious of having more money after the tax cut last July.

''It just goes into the general fund,'' he says, adding that this usually means the money is invested or saved.

A lower tax rate won't save the economy alone, he says, but it helps. Yet as long as federal government is borrowing heavily, he is concerned that smoldering inflation will catch fire again.

The only way to help, Norton says, is for ''people like me to put the money they get from the tax cut into investment.''

Norton is the first Republican mayor of this 3-to-1 Democratic city since Harvey Firestone held the office in 1958.

Another longtime Beverly Hills resident, a Democrat, sees the Reagan tax cuts much as Mayor Norton does. He recalls the depression: ''When the rich man doesn't have enough to spend, the poor man suffers worse.'' Lombard, Ill.

Roberto Medina may be getting a tax cut this week, but he is much more conscious of the possibility that he may lose his job

He's worked for the last 20 years as a tool room machinist for a Chicago bicycle firm that has decided to contract out most of its work to plants in Tennessee and Taiwan. As a highly skilled worker with seniority, he hopes he will be one of the few kept on when layoffs are announced at the end of this week. But he helped organize a United Automobile Workers local at the plant three years ago and considers himself vulnerable. ''I'm in limbo,'' he says.

Sitting in the sparsely furnished but neat living room of his 60-year-old white frame house here in the Chicago suburb of Lombard, this slender father of five says he hasn't really noticed any effect on his paycheck from the two tax cuts in years past. And he doesn't expect to notice the new one.

''The idea makes sense,'' he says. ''The problem is that it's a vicious cycle. What they give you with one hand they take with another. If the federal government cuts back, state and local taxes are often raised. And your benefits and wages tend to get cut back. So you're right back to square one.''

Mr. Medina, who came to this country from Puerto Rico at the age of 18, is a single parent living with his three youngest children. Two are teenagers, he says, who need clothes and shoes and are ''always pestering me for money.''

What will he do with the newest federal tax turn back?

''I'll probably end up spending it like I did the others,'' he says. ''My instinct from my culture and family background is to save one of every two dollars I make. But I don't see how the average blue-collar worker with a family the size of mine could save. I don't have any savings.''

Yet, glancing occasionally at a baseball game broadcast without sound on a nearby small black and white TV set, he insists he is frugal.

''I'm not a spendthrift. I don't drink or smoke or party - and I don't gamble either. I buy all my clothes at K-Mart or Venture, and I don't have a new car. I drive a 1975 Chevy with almost 100,000 miles on it. I'm able to keep it going because I'm handy.''

How July 1 tax cut will affect you. . . If you are single, and claim 2 with- holding exemptions and 1 liability exemption: ANNUAL WEEKLY Current Proposed Savings to Salary Salary withholding withholding taxpayer $ 5,000 96.15 3.69 3.69 0.00 $10,000 192.31 18.92 17.48 1.44 $15,000 288.46 37.85 34.60 3.25 $20,000 384.62 62.19 57.02 5.17 $25,000 480.77 91.42 82.02 9.40 $30,000 576.92 124.23 111.02 13.21 $35,000 673.08 159.81 143.71 16.10 $40,000 769.23 195.38 179.23 16.15 $45,000 865.38 230.96 214.81 16.15 $50,000 961.54 266.54 250.38 16.16 $55,000 1,057.69 302.12 285.96 16.16 $60,000 1,153.85 337.69 321.54 16.15

If you are married, filing a joint re- turn, and claim 4 withholding exemp- tions and 3 liability exemptions: ANNUAL WEEKLY Current Proposed Savings to Salary Salary withholding withholding taxpayer $5,000 96.15 0.00 0.00 0.00 $10,000 192.31 8.31 8.31 0.00 $15,000 288.46 23.63 21.19 2.44 $20,000 384.62 41.34 37.54 3.80 $25,000 480.70 61.98 55.63 6.35 $30,000 576.92 86.44 78.17 8.27 $35,000 673.08 114.42 103.42 11.00 $40,000 769.23 146.92 132.08 14.84 $45,000 865.38 182.50 163.81 18.69 $50,000 961.54 218.08 196.46 21.62 $55,000 1,057.69 253.65 232.04 21.61 $60,000 1,153.85 289,23 267.62 21.61

Source: U.S. Internal Revenue Service