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Honorable Harrison A. Williams, Jr.

S. 1867

Mr. Cowen, Chairman of the Board, states as follows:

"As I stated at the hearings in the House on H.R. 7200, I
believe that it would be unthinkable to remove the temporary
increases. The Senate version has a Part A which keeps
these increases temporary, but Part B extends them perma-
nently. In Part B, additional tax income equivalent to
7.5 percent of the taxable payroll is added by having
employees and employers each pay half of the additional
amounts. Such additional taxes will become effective on
January 1, 1975, the date on which the bill would make the
increases permanent.

"The extension of the temporary increases on a permanent basis
after December 31, 1974, and the corresponding tax increases
would become effective only if the representatives of railroad
labor and management could not reach an agreement which would
be enacted into law by that time. Assuming that an agreement
can be reached, these provisions would not become effective,
and it would not cause any problem.

"If no agreement were enacted into law by December 31, 1974,
we would again be in the position of having to terminate the
temporary increases. This would be just as undesirable at
that time as it is now, and I believe an extension would have
to be made. However, by that time the financial condition
of the railroad retirement program would be extremely serious.
The Commission on Railroad Retirement and the Board's actuaries
have estimated that by 1985 the program would be in danger of
running out of funds even without the eligibility liberaliza-
tion contained in this bill.

"As an actuary, I know that the longer corrective action is
delayed the more drastic will be the solutions to the
financial problems of the program. Therefore, providing
additional income beginning in January 1975 will help to
alleviate the situation. Further, the additional taxes
provided by this bill would go a long way to putting the
program back into a sound actuarial position. On this
basis, I believe it desirable to include the provision
contained herein which would provide additional income to
the railroad retirement program. I realize the difficulties
which this might cause railroad labor and management, but
as Chairman of the Railroad Retirement Board I must con-
sider the ability of the program to meet its obligations."

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Honorable Harrison A. Williams, Jr.

S. 1867

Because of the short time between the introduction of the bill and the setting up of the hearings, there has been no opportunity to submit this report for clearance to the Office of Management and Budget. Copies of this report are being sent to that office immediately.

Sincerely yours,

FOR THE BOARD

R. F. Butler, Secretary

93D CONGRESS 1ST SESSION

H. R. 7200

IN THE SENATE OF THE UNITED STATES

MAY 23, 1973

Read twice and, by unanimous-consent order of May 22, 1973, referred to the Committees on Labor and Public Welfare, Commerce, and Finance

AN ACT

To amend the Railroad Retirement Act of 1937 and the Railroad Retirement Tax Act to revise certain eligibility conditions for annuities; to change the railroad retirement tax rates; and to amend the Interstate Commerce Act in order to improve the procedures pertaining to certain rate adjustments for carriers subject to part I of the Act, and for other purposes.

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Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

TITLE I-RAILROAD RETIREMENT ACT

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AMENDMENTS

SEC. 101. Section 2 (a) of the Railroad Retirement Act

6 of 1937 is amended

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(1) by striking out "Women" in paragraph 2 and inserting in lieu thereof "individuals";

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(2) by striking out "Men who will have attained

the age of sixty and will have completed thirty years of

service, or individuals" in paragraph 3 and inserting in lieu thereof "Individuals"; and

(3) by striking out "such men or" in paragraph 3 thereof.

7 SEC. 102. (a) Section 3201 of the Internal Revenue 8 Code of 1954 (relating to the rate of tax on employees under 9 the Railroad Retirement Tax Act) is amended by striking 10 out all that appears therein and inserting in lien thereof the 11 following:

12 "In addition to other taxes, there is hereby imposed on 13 the income of every employee a tax equal to the rate of the 14 tax imposed with respect to wages by section 3101 (a) of the 15 Internal Revenue Code of 1954 plus the rate imposed by 16 section 3101 (b) of such Code of so much of the compensa17 tion paid to such employee for services rendered by him 18 after September 30, 1973, as is not in excess of an amount 19 equal to one-twelfth of the current maximum annual taxable 20 'wages' as defined in section 3121 of the Internal Revenue 21 Code of 1954 for any month after September 30, 1973." (b) Section 3202 (a) of such Code is amended

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(1) by striking out "1965" wherever it appears in

the second sentence thereof and inserting in lieu thereof

"1973";

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(2) by striking out "(i) $450, or (ii)" wherever

it appears in the second sentence thereof; and

(3) by striking out ", whichever is greater," wherever it appears in the second sentence thereof.

(c) Section 3211 (a) of such Code (relating to the 6 rate of tax on employee representatives under the Railroad 7 Retirement Tax Act) is amended by striking out all that 8 appears therein and inserting in lieu thereof the following: "In addition to other taxes, there is hereby imposed on

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10 the income of each employee representative a tax equal to
11 9.5 percent plus the sum of the rates of tax imposed with
12 respect to wages by sections 3101 (a), 3101 (b), 3111
13 (a), and 3111 (b) of the Internal Revenue Code of 1954 of
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so much of the compensation paid to such employee repre-
15 sentative for services rendered by him after September 30,
16 1973, as is not in excess of an amount equal to one-twelfth
17 of the current maximum annual taxable 'wages' as defined
18 in section 3121 of the Internal Revenue Code of 1954 for
19 any month after September 30, 1973."

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(d) Section 3221 (a) of such Code (relating to the 21 rate of tax on employers under the Railroad Retirement Tax

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Act) is amended by striking out "In addition to other 23 taxes" and all that follows to "except that" and inserting

in lieu thereof the following:

"In addition to other taxes, there is hereby imposed on

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