Rolling Stone: Ronald Reagan: Welfare Queen of Montana (or: Tax Tips for Mitt Romney)

Here is one thing we know about Mitt Romney: He loves Ronald Reagan (or at least he does now). Here is another: He also loves the Cayman Islands. It's something he kind of shares with the Gipper: creativity in sheltering his fortune from the prying eyes of tax collectors. But here's something he does not share with Ronald Reagan at all: skill at waving his hands and making the story go away. Not many people remember this now, but when Reagan was governor of California in the early 1970s, it came out that he'd paid no state income taxes – none – one year, despite being a wealthy man. And yet, he went on to run – twice – for the highest office in the land, without the revelation making any sort of dent at all. Learn from the master, Mitt.

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Well. The UPI wire service did the accounting. It turned out that, in addition to his $41,100 salary as governor, for which a Californian would ordinarily owe $2,700 without deductions, Reagan had sold 236 acres of his Yearling Row Ranch in the Malibu Mountains in 1968 to 20th Century Fox studios for a reported $1.93 million. (To figure these sums in current dollars, multiply by a factor of about 5.5). He refused to say how this all added up to an absence of taxable income. He also refused to make his tax records public, or say what the "business reversals" were – refused with a vengeance. Arriving at the Capitol the next day, asked whether he would clarify his federal tax status, he answered, "Why should I have to clarify the status? Frankly, I think the Capitol press corps demeaned itself a little by engaging in invasion of privacy." (Turn the question around, playing the victim card against the wicked jackals of the press: Newt Gingrich would absorb the lesson well.)

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They were right, and Buckley was wrong. One month later, the Sacramento Bee broke the story of how things really went down with Reagan's taxes, and it was a doozy. The governor had contracted to have cattle he owned "managed" by a company called Oppenheimer Industries, which in its brochures advertised to clients with a net worth of at least $500,000. "Federal tax laws favor cattle if you pick the right kind and stick to the rules. Herds of beef cows top the list. When you buy them, you become a farmer and can keep your books on a cash basis. You put in dollars that depreciate or are deductible. You take out capital gains." Voila: newly minted cattlemen – their ranks, the Bee reported, also included Jacky Benny and Alfred Hitchcock – "lose" enough money on cows raised hundreds or thousands of miles away "to avoid or postpone payment of any income tax, state or federal."

The New York Times was the only outlet to follow up. The paper tracked down a Montana rancher who domiciled beasts for Oppenheimer. "This is strictly a tax dodge on their part," he attested. The Times also found nifty brands signifying ownership by the "Reagan Cattle Company" on steer in three different states – a "Trident Bar R" mark in Wyoming, "Gunsight Rocking R" in Nevada, and "Gunsight R" in Montana. (Reagan had, to be fair, starred with Barbara Stanwyck in the 1954 Cattle Queen of Montana.) The Times also found a copy of Reagan's contract, "signed for him by his personal attorney and close friend, William French Smith." Long-memoried political junkies of a certain age will recall that President Reagan later named Smith attorney general of the United States.

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