Clinton Plan Seen as Not Too Taxing : Affluent South Bay Residents Express Support for Increases, but Only If a Smaller Deficit Results

South Bay taxpayers wouldn’t seem likely to rally behind President Clinton’s tough tax medicine. Largely conservative and affluent, many have the most to lose.

Yet several area residents and their tax preparers contacted by The Times in the wake of Clinton’s televised address last week were surprisingly receptive to his proposed income tax increases.

“I think it is fair and it’s going to help the economy, which is even better,” said Valentine Awosika, a certified public accountant based in Inglewood.

That’s not to say, however, that all South Bay taxpayers are eager to open their wallets for Uncle Sam. Tax preparers on the Palos Verdes Peninsula say their clients, particularly those earning six-figure incomes, are forlorn.

“They are crying,” said Elizabeth Arfania, a Rolling Hills Estates income tax preparer. “They are very unhappy . . . They believe the burden is going to end up on the middle-class person . . . no matter what (Clinton) says about this $140,000 cut-off.”

A look at 1990 Census figures provides a good idea about which South Bay families can expect to be hit by higher income taxes. As of 1989, the year on which Census income figures were based, 12.2% of all South Bay families reported an annual income over $100,000.

By comparison, 8.4% of all families in California earned that much, while 9.3% of Los Angeles County’s families did.

Although it is impossible to determine how much of a family’s Census-recorded income must be reported to the IRS--or what kind of deductions they would be allowed to take--the figures provide a map of where the South Bay’s upper crust lives.

Most of those families live on the Palos Verdes Peninsula, with gated Rolling Hills chalking up a whopping 79.5% of its families earning six-digit incomes. On the other end of the scale, only 1.9% of all families in both Lawndale and Lennox earned more than $100,000 a year.

Yet, despite the income disparity, taxpayers from Palos Verdes to Inglewood expressed similar support for the concepts behind Clinton’s plan.

“I’m impressed, personally, and I’m willing to do my share,” said Shirley Bork, a Rancho Palos Verdes resident and president of the local League of Women Voters. “I think that most people see a fairness in it . . . and they’ll sacrifice if they believe it’s hitting people equally and doing some good.”

“I think it is fair. It’s nice,” said accountant Awosika in Inglewood. “It’s going to help the economy in the future and bring things under control. That’s all good.”

That support does not come without some caveats, taxpayers warn.

“I would pay some more taxes to reduce the deficit, if that’s what it actually goes toward,” said Jerry Gaines, a business and economics teacher at Palos Verdes Peninsula High School.

Friends and neighbors in his San Pedro community feel the same way, he said.

“People aren’t stupid,” he said. “They understand . . . if you don’t get a handle on what’s going out faster than what’s coming in, at some point it’s going to be a total disaster,” he said. “But people want to see that they’re getting something for their bucks, that government is cutting back and that the deficit is going down.”

Torrance accountant Bob Dworkin said two of his clients have asked him whether their additional tax payments could be placed into a special fund designated only to reduce the deficit.

“It’s probably unworkable, but it certainly would be something to see,” Dworkin said. “Even my six-figure clients, they don’t feel rich, what with having to put all their money just into house payments . . . but they understand where the country is and they want to do their share.”

Some South Bay taxpayers expressed concern about how the increases in hidden taxes, such as energy consumption levies, might affect families.

“Our youngest son has four children and I don’t know what his income is, but I imagine it’s fairly good and they’re just barely making it,” said Gertrude Schwab, a Wilmington homeowner activist. “I can’t imagine what will happen if they have to pay even more.”

Schwab, 68, said senior citizens with above-average incomes could easily pay more taxes on their Social Security payments to help the federal government make ends meet.

“It’s the young families that are having the hard time,” she said. “I’d certainly rather pay more myself than make them pay it.”

But city officials sounded a cautionary note that Clinton’s tax-raising plans are only the first in a series of such plans at all levels of government.

“The state government is talking about its need to raise its income and the county is talking about taking more for itself and the cities are talking about it too,” said Rancho Palos Verdes Councilman Steve Kuykendall. “We’re doing all this on top of an extremely beat-up local economy.”

Clinton’s plan to shift federal spending into social, educational and infrastructure programs, while cutting the defense contracts on which the South Bay has relied, spells trouble for the area, he warned.

“He may help the inner city, but it’s not going to help that $75,000-a-year engineer who doesn’t have a job anymore and that’s the constituency I’m dealing with here on the Palos Verdes Peninsula,” Kuykendall said. “I don’t see any silver linings in these clouds for our little region here.”

Biting the Biggest Income Earners

Charts show how President Clinton’s tax proposals would affect federal tax bills of three imaginary South Bay families. Calculations are based on representative family incomes in Inglewood, El Segundo and Rolling Hills, which respectively rank in the low, middle and high income ranges among South Bay cities.

Inglewood

(Husband, wife and two children; salary of $38,000, total itemized deduction of $6,700)

PRESENT CLINTON LAW PROPOSAL Adjusted gross income $38,000 $38,000 Itemized deductions $6,700 $6,700 Income tax $3,285 $3,285 FICA for Medicare $551 $551 Total tax $3,836 $3,836 before energy tax Net increase $0 $0 before energy tax Energy tax $0 $320*

El Segundo

(Husband, wife and two children; salary of $60,000, total itemized deductions of $13,800)

PRESENT CLINTON LAW PROPOSAL Adjusted gross income $60,000 $60,000 Itemized deductions $13,800 $13,800 Income tax $5,520 $5,520 FICA for Medicare $870 $870 Total tax $6,390 $6,390 before energy tax Net increase $0 $0 before energy tax Energy tax $0 $320*

Rolling Hills

(Husband, wife and two children; salary of $257,000, total itemized deductions of $50,000).

PRESENT CLINTON LAW PROPOSAL Adjusted gross income $257,000 $257,000 Itemized deductions $50,000 $50,000 Income tax $57,381 $60,841 FICA for Medicare $1,958 $3,727 Total tax $59,338 $64,567 before energy tax Net increase $0 $5,229 before energy tax Energy tax $0 $320*

* Estimate based on a typical U.S. family with a $40,000 annual income. Estimates taking into account other income levels and specific regions of the country are not yet available.

Sources: Salary levels selected from mean U.S. Census figures for Inglewood, El Segundo and Rolling Hills. Tax figures prepared by Stephen R. Corrick of Arthur Andersen’s Office of Federal Tax Services in Washington.

Six-Figure Families

Figures from the 1990 Census show the percentage of South Bay families earning $100,000 or more.

MORE THAN MORE THAN MORE THAN AREA $100,000 $125,000 $150,000 Avalon 6.7% 4.0% 3.3% Carson 6.1 2.2 0.9% El Segundo 10.7 4.1 2.5 Gardena 4.0 1.6 1.0 Harbor Gateway 3.2 1.0 0.6 Hawthorne 2.9 1.5 0.8 Hermosa Beach 27.3 14.8 8.7 Inglewood 2.9 1.2 0.4 Lawndale 1.9 0.7 0.3 Lennox 1.9 0.4 0.1 Lomita 6.6 2.6 1.1 Manhattan Beach 36.6 22.8 16.8 Palos Verdes Estates 56.5 41.5 30.3 Rancho Palos Verdes 42.0 26.5 17.4 Redondo Beach 15.2 6.9 3.8 Rolling Hills 79.5 65.0 59.6 Rolling Hills Estates 44.4 32.3 22.5 San Pedro 7.0 2.6 1.5 Torrance 13.7 6.4 3.6 Westchester/ 17.8 9.2 6.0 Playa del Rey Wilmington/ 4.2 1.2 0.7 Harbor City South Bay 12.2 6.6 4.2 L.A. County 9.3 5.4 3.7 California 8.4 4.6 3.0