-2 Honorable Harrison A. Williams, Jr. S. 1886 retirement annuity formula. It is a rare case where the inclusion of post-retirement social security earnings in the guaranty provision computation would result in an annuity previously paid at the rate provided by the regular formula being transferred to the rate provided under the guaranty provision. Therefore, in order to relieve the Board of the problems created by the aforementioned requirement, clauses (ix) and (x) were added to Section 3(e) of the Act by Public Law 92-460 to provide that, in computing the "average monthly wage" for purposes of determining the amount payable under the guaranty provision, only the individual's social security earnings through the year before his annuity began to accrue would be included. While the provisions of clauses (ix) and (x) of Section 3(e) of the Railroad Retirement Act fully accomplished the purpose intended under the law in existence at the time of their enactment, the Social Security Act was amended shortly thereafter by Public Law 92-603 to provide special minimum primary insurance amounts (see section 215(a)(3) of that Act) and so-called "increment month" increases (see section 202(w) of that Act). Since the determination of either a special minimum primary insurance amount or an increment month increase does not involve the computation of an "average monthly wage", the provisions of clauses (ix) and (x) are not applicable in making such determinations, and, therefore, the purpose of these clauses is defeated to a significant extent. Enactment of section 1 of the bill would fully effectuate the original purpose of the clauses in question. As a result of the enactment of Public Law 92-603, approved October 30, 1972, the eligibility conditions for children's benefits under the Social Security Act were liberalized, and the amendments proposed by section 2 of this bill would make the same liberalizations for annuities payable under the Railroad Retirement Act. Thus (1) a child's survivor benefit would continue after his adoption by anyone, instead of by a close relative only (section 1(1) of the bill); (2) a survivor benefit would be paid to a child for a disability which began before age 22, instead of before age 18 (section 1(2) of the bill); (3) a student child would continue to receive benefits after age 22 in some cases (section 1(5) of the bill); and (4) a dependent grandchild would be treated as a child of his grandparent (section 1(3) of the bill). In addition, as a result of the change mentioned in item (2), a wife under age 62 (if her husband has attained age 65 and has been awarded an annuity) or a widow under age 60 would be eligible for a railroad retirement annuity if she has in her care a child who became disabled between the ages of 18 and 22. -3 Honorable Harrison A. Williams, Jr. S. 1886 The amendments proposed by section 2 of the bill were originally included in the bill for technical amendments sponsored last year by the Board. These provisions were deleted from the bill which was subsequently enacted, on October 4, 1972, as Public Law 92-460 because they were contingent upon the enactment of H.R. 1, 92d Congress, and it was believed that H.R. 1 would not be enacted in 1972; H.R. 1, however, was enacted on October 30, 1972, as Public Law 92-603. The costs resulting from these amendments together with the cost and savings from the technical amendments enacted in Public Law 92-460 and additional financial interchange gains because of the enactment of Public Law 92-603 balance out so that no financial burden would result. The bill would also effect an amendment to section 226(e) of the Social Security Act to extend kidney disease Medicare coverage to railroad employees, their spouses, and their dependent children. As a result of the enactment of section 2991 of Public Law 92-603, an individual insured under the Social Security Act, his spouse, or his dependent children who need treatment (hemodialysis or renal transplantation) for kidney disease are covered under Medicare, beginning July 1, 1973, in the same way as beneficiaries age 65 and over or disabled beneficiaries under age 65. The present provision, however, does not cover railroad employees or their spouses or children unless they also happen to be insured under the Social Security Act on the basis of wages only. Such an omission had to be the result of an oversight since in all other respects railroad retirement beneficiaries are entitled to the same Medicare coverage as their social security counterparts. The proposed amendment would correct this oversight. The Board, therefore, recommends that your Committee act favorably on this bill. A report on the identical bill H.R. 7357, introduced in the House of Representatives on April 30, 1973, by Mr. Staggers, has been cleared with the Office of Management and Budget which informed us that there was no objection to the presentation of the report from the standpoint of the administration's program. CC: Honorable Roy L. Ash Sincerely yours, Ko Bath FOR THE BOARD R. F. Butler, Secretary Director, Office of Management and Budget Washington, D. C. 20503 93D CONGRESS 1ST SESSION S. 1805 IN THE SENATE OF THE UNITED STATES MAY 14, 1973 Mr. RIBICOFF introduced the following bill; which was read twice and, by unanimous consent, referred to the Committees on Commerce, Finance, and Labor and Public Welfare, jointly A BILL 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. 1 Be it enacted by the Senate and House of Representa 2 tives of the United States of America in Congress assembled, TITLE I-RAILROAD RETIREMENT ACT 3 4 5 AMENDMENTS SEC. 101. Section 2 (a) of the Railroad Retirement Act 6 of 1937 is amended 7 8 (1) by striking out "Women" in paragraph 2 and inserting in lieu thereof "individuals"; 1 2 2 (2) by striking out "Men who will have attained the age of sixty and will have completed thirty years of 3 4 service, or individuals” in paragraph 3 and inserting in lieu thereof "Individuals"; and 5 6 7 (3) by striking out "such men or" in paragraph 3 thereof. 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 lieu 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." 22 22 23 24 (b) Section 3202 (a) of such Code is amended— (1) by striking out "1965" wherever it appears in the second sentence thereof and inserting in lieu thereof 1 2 3 4 3 (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. 5 (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: 9 "In addition to other taxes, there is hereby imposed on 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 (a), 13 and 3111 (b) of the Internal Revenue Code of 1954 of so 14 much of the compensation paid to such employee repre15 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." 20 (d) Section 3221 (a) of such Code (relating to the rate 21 of tax on employers under the Railroad Retirement Tax 22 Act) is amended by striking out "In addition to other 23 taxes" and all that follows to "except that" and inserting 24 in lieu thereof the following: 25 "In addition to other taxes, there is hereby imposed on |