140 RAILROAD RETIREMENT LEGISLATION (3) The increases in certain annuities would be accomplihsed at the expense of many thousands of individuals (mostly survivors) who are receiving only a single benefit under the Railroad Retirement Act and whose benefits the bill would reduce. Iore bebizony emooi to In view of the foregoing, the Board recommends that no favorable consideration be given to the bill. Inasmuch as hearings on bills to amend the Railroad Retirement Act have been set for March 6, 1956, this report is submitted without prior clearance with the Bureau of the Budget. A copy of the report is being forwarded to the Bureau of the Budget today and you will be informed of the views of that Bureau as soon as they are received. Sincerely yours, RAYMOND J. KELLY, Chairman. Mr. HARRIS. The list of the bills shows the names of the sponsors of the bills. The Chair introduced the bill, H. R. 9065, on February 16, 1956. It has the support of the Railway Labor Executives Association. Since that time, the Chair has observed that a number of this colleagues on this committee became cosponsors of the bill, which I was glad to see. Also a number of our colleagues in the House have become cosponsors of the bill. In fact, a total of 68 bills on this particular subject have been introduced. All of the standard unions affiliated with Railway Labor Executives Association, as I understand, are supporting that approach. It does not go as far as other groups would desire in connection with liberaliz ing the railroad retirement benefits. It is further than some other groups would desire. There is one important subject matter attached to it which will, of course, receive the attention of this committee, and I am sure of the Congress, should such a measure or something similar to it, be reported. We are glad to observe some of our colleagues present this morn ing, whom we did not have the privilege of hearing in January, when we had several days dedicated to this program. I am sure they have other meetings to attend and are very anxious to get away. I note the distinguished member of the Ways and Means Committee, our colleague from Florida, Mr. Herlong, whom we are glad to welcome here. He has indicated that he has a brief statement to make. STATEMENT OF HON. ALBERT SYDNEY HERLONG, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA Mr. HERLONG. Thank you very much, Mr. Chairman. I appreciate this opportunity of testifying briefly in behalf of H. R. 9602. I think this committee knows that this is an identical bill with the one introduced by Mr. Harris. You can call my introducing the bill gilding the lily, or window dressing, or call it what you want to; it does not make any difference to me. The reason I introduced it is because I am thoroughly in accord with the provisions of the Harris bill. Our people who are in the railroad business down in Florida are very much in accord with it. All of the brotherhoods are in favor of it-have indicated to me that they were in favor of it-and I just want to do everything I can to lend strength to Mr. Harris' bill. I realize, of course, that so many bills have been introduced, that we are liable to get ourselves in the position of just saying we are jumping on somebody else's bandwagon. I have no pride of authoriship. I have no desire to claim any credit except to further the bill along as far as I can, Mr. Chairman. This bill, as I understand it, does provide for some additional revenue and I think that is an important feature. None of us can be for any retirement bill without raising the funds which are to be used to pay the retirement. am thoroughly convinced that this bill is actuarily sound. We must make sure that it is actuarily sound or none of us should be for it. We can pay out all of these benefits; all of the money in the fund in benefits, without raising any money, and we are very shortly going to find ourselves in an awful bad fix. So I do hope that the committee will be careful to see that any bill that comes out of the committee is sound from an actuarial standpoint. I know the committee has had testimony in the past with reference to the benefits to be derived under this bill and we are all aware of the fact that when living costs are raised, the man on a fixed income, or retirement income, is the man who is really put in the squeeze. I am sure you are all going to do everything you can to help these people. They need the help, with the cost of living acting like it has been acting during the past few years. Mr. Chairman, I do not want to take any more of the committee's time. I do appreciate this opportunity of being here. Mr. HARRIS. Thank you very much, Mr. Herlong. We appreciate having had your fine statement. Are there any questions? Mr. WILLIAMS. Mr. Chairman. Mr. WILLIAMS. I do have one question of Mr. Herlong, who is, as you have stated, a distinguished member of the Ways and Means Committee of the House. Mr. HERLONG. This bill provides that the amount of taxes imposed upon the income of any individual by this section shall be excluded from such individual's gross income, for income-tax purposes. As I understand it, the purpose of that language is to exclude that part which an individual pays into this retirement program from being included as a part of his income for income-tax purposes. Mr. HERLONG. That is correct. Mr. WILLIAMS. It is my understanding that legislation presently before the Ways and Means Committee would extend a similar benefit to all of the people. Is it your feeling that this particular provision in the pending bill is sound from a tax standpoint? Mr. HERLONG. From a tax standpoint? Mr. WILLIAMS. Yes; in regard to fairness to everybody concerned, including the general public. Mr. HERLONG. My feeling on that is that the individual should pay a tax somewhere along the line, either when he gets the money or when it is paid, on the cost of one element, which has to do with the payment of their retirement. Either he would do that or he would not pay anything. We would exempt everyone. We have got to treat them all alike. Now that bill you are talking about is in our committee now but has not received serious consideration up to this point. We have had no hearings on it. Mr. WILLIAMS. Is it your feeling then that there is a serious principle involved? Mr. HERLONG. As I said, I made a copy of the bill introduced by the chairman of this committee, because I had been advised that it was the bill that met with the approval of all of the brotherhoods and all of the railroad executives organizations, and I went into that feature of the thing yesterday afternoon. I wanted to find out what was means by-I knew what was meant by excluding from an individual's gross income, for the purpose of chapter 1 and from such individual's wages for the purposes of chapter 24. But I have not read chapters 1 and 24 recently. I asked my office to get that information for me, but I was tied up just before I came over here, and was not able to get it. But I honestly think they have got to pay a tax either when they are paid the money or some other time. I say there is no reason to exempt completely the money that is paid into the fund and then exempt it again when it comes out of the fund. There is no reason for that. That is not sound. You are giving somebody something for nothing when you do that. Mr. WILLIAMS. I just wanted to get your thoughts on it. Thank you very much. Mr. HERLONG. I do not think there is any doubt, Mr. Chairman, in connection with this whole picture, and that most anyone who has gone into the thing, I think, will think it is fair. All of the people agree with that position. People do not want something for nothing. Mr. HARRIS. Are there any further questions? Mr. HALE. Mr. Chairman. Mr. HARRIS. Mr. Hale. Mr. HALE. Mr. Herlong, if I understand you correctly, at the present time the payments which a man makes into this fund are not deductible from his gross income for income-tax purposes. Is that correct? Mr. HERLONG. I understand that is correct; yes, sir. Mr. HALE. The same is true with regard to the social security and all of these other similar things. Mr. HERLONG. That is right. The social security is not deductible. Mr. HALE. But it is a kind of tax, is it not? Mr. HERLONG. That is right. Mr. HALE. And you feel that under the existing law they should be deductible? Mr. HERLONG. No; I say that they have all got to be treated alike and if we deduct them all, I am afraid we will lose so much revenue that we will not be able to do what certain people and certain political parties are very anxious to do, that is, balance the budget. Mr. HALE. I should like to get your views. Do you think section 5 of this bill is all right? Do you think it is fair? Mr. HERLONG. As I stated, Mr. Hale, I wanted to get a bill in here to lend whatever strength I could to the idea of increasing the retirement benefits of the railroad employees, and I have not gone into the details of the bill that was introduced by the chairman of the committee here, Mr. Harris. I would want to be sure-and I have said this is my original statement-I want to be sure that anything that is done is sound from an actuarial standpoint. And may I say that I want to be sure that it is sound and fair from an economic standpoint too. Mr. HALE. I must say it seems to me that if the Federal Government says you have got to pay this money into such a fund as a tax, then it seems to me that it-the Federal Government-ought to say it is not income to you because we have taken it away from you. Mr. HERLONG. No; it is not income. Mr. HALE. I mean, it ought to be deductible, it seems to me. Mr. HERLONG. It is not income to an individual unless he gets it; until he buys something with it. Now, he is buying his retirement with this money. He is buying it and therefore, inasmuch as he is buying his retirement, it is income to him. Mr. HALE. I can see that there are two ways of looking at it, but it is a tax. Mr. HERLONG. Yes; it is a tax. Mr. HALE. It is a tax, to be sure. Mr. HERLONG. The social security is a tax, but a man is buying his retirement with that. Mr. HALE. You might say that any tax that we pay is supposed to buy something. Mr. HERLONG. But I mean it is buying something that he can take directly in the way of retirement benefits later on. Mr. HALE. It is an interesting point. Mr. HERLONG. I would have no quarrel with the committee as to what they did about this whole problem. The only thing I would want to do, as I said, is to be sure that what you do is sound and fair and does not put any burden on us where we are going to have to exempt everybody from taxation on the social security. And if you do this, we are liable to have to do that for everybody. Mr. HALE. I do want to say one other thing. I don't know. It may be that there is some conflict of jurisdiction between this committee and your committee. But when you come to section 5 Mr. HERLONG. There could be. Of course, the bill was referred to your committee-and the Speaker has the right to do that, regardless of the provisions of the proviso, because it goes to the committee which has the greatest portion of the subject matter of the bill under its consideration. Mr. DIES. May I ask a question, Mr. Chairman? Are you through? Mr. HALE. I am through. Mr. HARRIS. Mr. Dies. Mr. DIES. On what ground do you justify permitting these payments to be deductible and not doing the same thing with regard to social security? Is there any distinction here that anybody can point out between the payment to this retirement fund and the money that is paid into the social security, and a number of other retirement funds? Mr. HERLONG. I do not know that there is, Mr. Dies. Mr. DIES. Perhaps someone can make the distinction. Mr. HERLONG. I would like to hear some statements on that because I am not an expert on it. Mr. HARRIS. Well, it is a matter of policy for the Congress to determine, is it not? Mr. HERLONG. I would think so. But I would like to hear some experts who have gone into this matter of the railroad retirement and know more about it than I do, to give their impressions on it. Mr. HARRIS. Yes. I think it will be developed that there are certain provisions with reference to income-tax payments in the Railroad Retirement Act which is not present in any of the social security retirement annuities. Mr. HERLONG. If you can make a distinction, that is wonderful. Mr. HARRIS. And it has, therefore, been done. It was done when the act was passed originally. I think that will be developed thoroughly during the course of the hearings. Thank you very much, Mr. Herlong. Mr. HERLONG. Thank you very much. Mr. HARRIS. We appreciate your statement. STATEMENT OF HON. HARLEY 0. STAGGERS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST VIRGINIA Mr. HARRIS. I see our colleague on this committee, our good friend, Mr. Staggers, sitting back there. I am sure he is vitally interested in this subject. Do you have anything that you want to say this morning? Mr. STAGGERS. Yes, Mr. Chairman. Mr. HARRIS. Of course, you are welcome up here with us. You are a member of the committee. Mr. STAGGERS. Mr. Chairman and members of the committee, I did not come over to testify, but I am glad to have this opportunity to say that I am wholeheartedly in support of H. R. 9065, the bill introduced by the chairman of this subcommittee. n I have introduced an identical bill to this and I expect to support it when it comes before the full committee. I hope to be present at all of the hearings, in order to be able to discuss it when we do get it before the full committee and also be able to discuss it somewhat in detail when it hits the House floor. So I expect to be present. I do not want to take too much of your time." course because you are a Mr. HARRIS. Thank you very much. Of course, you can take your place up here on the bench during these hearings, member of this committee and you are welcome to attend the hearings of this subcommittee. STATEMENT OF HON. CLEVELAND M. BAILEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST VIRGINIA Mr. HARRIS. We welcome our colleague, Mr. Bailey, who has always manifested an interest in the railroad-retirement bills. We are glad to have you with us again today. ebaut Mr. BAILEY. Mr. Chairman and members of the committee, for the purpose of the record, I am Cleveland M. Bailey, of the Third West Virginia I in support of H. R. 9645, which is an exact duplicate of H. R. 9065, introduced by the presiding chairman of this committee today. |