WASHINGTON -- At a time when the careers of Bill Clinton and Hillary Rodham were shifting into high gear, their earnings, too, quickly shot up, nearly quadrupling between 1977 and 1979, according to copies of the couple's tax returns released yesterday.
The returns, made public by the White House to answer persistent questions about the couple's Whitewater investment, appear to bolster Mr. Clinton's claim that he and his wife lost money on the land deal, although less than they originally stated.
However, the documents are inconclusive on the politically sensitive question of whether the Clintons properly calculated their tax payments in connection with the Whitewater partnership. One Washington tax attorney, who was provided an advance copy of the returns by the White House, said he could not say "definitively" whether the Clintons' federal income tax deductions in those years were proper.
"If I were an Internal Revenue Service agent, I would want additional information to satisfy myself," said Ronald A. Pearlman, former staff chief of the congressional Joint Committee on Taxation, who was one of four tax experts the White House invited reporters to contact yesterday.
Mr. Pearlman blamed the "careless" nature of the Clintons' tax returns on their Little Rock accountant, rather than the Clintons themselves. Another expert on the Clintons' returns, who briefed reporters at the White House yesterday, said the fault lay in the highly informal bookkeeping of the Whitewater partnership.
The Clinton tax documents, 60 pages in length, provide the personal financial backdrop to the Whitewater controversy, which has mushroomed from questions about the real estate transaction into a host of related investigations involving a failed Arkansas savings and loan, the Rose Law Firm, where Mrs. Clinton once worked, and the 1993 suicide of White House deputy counsel Vincent W. Foster Jr.
David E. Kendall, the Clintons' personal attorney, told reporters, "In a spirit of full cooperation and openness, the Clintons have now made public their tax returns for the past 16 years, since Mr. Clinton's first year in public office."
The returns sketch a portrait of two lawyers in their early 30s with relatively modest salaries. In 1977, their combined income was $41,731.
But by 1979, their joint income totaled $158,495, thanks to earnings from Mrs. Clinton's foray into commodities trading, a risky venture that over a two-year period yielded more than $100,000. In fact, her 1979 profits from investments in cattle futures roughly equaled the combined salaries of Mrs. Clinton, who was still using her maiden name Rodham at the time, and her husband.
It was also at this time that Mrs. Clinton's salary began to outpace her husband's, a pattern that would continue until his election as president.
Her income from the law firm went from $38,616 in 1979 to $203,172 in 1992, while his annual salary as governor remained almost unchanged. It was $33,519 in 1979 and $35,000 in 1992.
At the same time that Mrs. Clinton was dabbling in the commodities market, the Clintons invested in the Whitewater land deal with another couple, Jim McDougal and his then-wife Susan.
Neither the Clintons nor the McDougals put up any of their own money. Instead, they signed loans for more than $200,000 for which the two couples were equally liable, according to an official who briefed reporters on the Clintons' tax returns.
The White House released the tax returns yesterday after a roar of questions and doubts about the Clintons' Whitewater losses. Mr. McDougal, for one, has estimated their losses at only about $13,500, about one-fifth of what the Clintons have been claiming until this week.
During the presidential campaign, Mr. Clinton released a report of his Whitewater losses, commissioned by Denver attorney and friend James M. Lyons, showing that the Clintons lost about $68,900 on the land deal. But at his news conference Thursday night he said he now believed that figure was inflated by more than $22,000. He recently realized, he said, that a check he told auditors had been a loan repayment for Whitewater was actually a loan to help his mother buy a house.
Asked yesterday how he could have been mistaken about the $22,000, Mr. Clinton told reporters, "Keep in mind, all this happened in the heat of the '92 campaign. Keep in mind, when I was first asked about this back in '92, just off the top of my head, I said we lost money but I don't think it was a great deal. . . . I think I'm quoted in '92 as saying I thought we lost about $25,000, from memory. So apparently we lost quite a lot more than that."
According to the tax returns released yesterday, the Clintons listed a total of $22,000 on their 1978 and 1979 returns that the White House says are interest payments for Whitewater loans.
The 1979 payments are in the form of checks to banks and to Mr. McDougal. However, a $10,130 payment listed on the 1978 taxes is to Great Southern Land Co., a real estate company owned by Mr. McDougal.
White House reporters were told yesterday that to the best of the Clintons' knowledge, they believed the Great Southern payment was for Whitewater, although there is no direct documentation to support that.
The White House briefer said the Clintons knew Great Southern to be "a McDougal real estate entity" that Mr. McDougal had said made Whitewater payments and thus needed to be reimbursed by the Clintons.
"We don't know how the company paid its interest. [Mr. McDougal] would say he needed money to make interest payments."
The Great Southern payment also amounted to about half of the first year's interest. "The degree of informality here was great," said the source, who briefed reporters on condition that he not be identified. He conceded the correlation between Great Southern and Whitewater required a leap of faith.
"This was never a company that had an office or employee. It was administering 44 lots in northern Arkansas," he said. " . . . I'm not trying to say you should not be skeptical. I'm trying to give you the best available information we have."
Subsequent payments of interest and real estate taxes as outlined yesterday bring the Clintons' total losses deducted on their tax returns from 1978 to 1990 to $46,635.
But the White House briefer said that the figure represented a "pre-tax loss," admitting the Clintons "got some tax benefit" from
claiming the losses on their taxes.