yo Let me say, Mr. Chairman and members of the committee, that the intent of H. R. 9645 is to provide a badly needed 15 percent increase in benefits for thousands of retired pensioners, widows, and other beneficiaries under the Railroad Retirement Act. It will accomplish this with only minor exceptions which I shall endeavor to explain. Jo You gentlemen of the committee will remember some 2 or 3 years ago, the Congress considered giving the railwa dered giving the remember that the Concent increase in retirement pay. You will gress, after granting a 20 percent increase in 1948, along in 1951 or 1952, considered further her increasing the the Railroad Retirement Act. At that time, as I recall, they were asking for a 25 king for a 25 percent increase. The committee voted a 10 percent increase and the taking of that action was predicated on the fact that there were some differences in the audits of the Railroad Retirement Board and the audits of the railroad workers, and the committee asked or provided for an independent audit, and I am advised that that audit indicated that we could have paid the 25 percent at that, time rather than the 10 percent which we granted. no sonetaize Isutos,ni mati as, stiup es yadi jadi bas heopber The objective of this bill bill I today is to pay that lo percent which we could well have paid some 2 or 3 years ago. iw ettimme eft to pred What we propose to do under H. R. 9645, and some three or more other bills now pending. in your co in your committee, is to grant this 15 percent which could well have been granted at that time. bad avad of In order to insure these increased benefits and keep the bill would raise the addi trust fund in sound financial condition, the bill keep the retirement tional funds in the amount covered payrolls. Both the employee and the employer will pay an additional 1 percent, making their contribution 714 percent on the first $350 of monthly wages, instead of 614 percent, the rate being paid rate being paid at the present time. The increased tax on employees would be immediately offset by exempting the employee's tax from gross wages in the computation of his income tax. We firmly believe such an exemption is fair and equitable since the employers already get credit on their corporation taxes for amounts paid into the retirement fund. We also point to the fact that workers in Canada and Great Britain already enjoy this exemption benefit, tedt bagtebau I ear -28Now, there are two exceptions to the overall 15 percent increase, as referred to above. They ared 10 nemeritas 10 satiyans ed ai 1. In the case of a beneficiary under the Railroad Retirement Act whose Railroad Retirement Act formula benefit is lower than it would have been had that person been covered by social security, this bill would not necessarily provide an increase. For example, if h he were now entitled to $30 per month under the railroad retirement formula, but under social security would have been entitled to $60 a month, this This bill would raise his railroad retirement formula annuity to $34.50 per month, He would still receive the benefit of the minimum guaranty and full $60. On the other hand, if he were entitled to $80 under the railroad retirement formula and by the application of the minimum guaranty now received $85, he would receive an increase. T is because his railroad retirment, formula entitles him to $92 per month. In simple terms, where the 15 percent increase provides a beneficiary with a benefit over the social security minimum, he receives the advantage of the increase. In cases where the 15 percent would leave a person below the minimum, he would continue to enjoy the present minimum guaranty protection. 2. This bill does not change the method of computing the spouse's annuity. The present law provides the spouse an amount equal to one-half the retired employee's monthly benefit, with a maximum allowable equal to the maximum provided by the Social Security Act. This section adopted just last year resulted in substantial increases for spouses. We do not feel that we are warranted at this time in seeking spouse's annuities in excess of those provided by the Social Security Act. It should be borne in mind that the family income of the spouse will be increased in the amount of 15 percent of the retired employee's annuity by this bill. Further, there will be a large number of spouses receiving an increase under this bill by reason of the increase in their husband's or wife's annuity. In conclusion, Mr. Chairman, may I suggest that this increase is long overdue, in view of the fact that our living costs have not been reduced and that they are quite an item in actual existence on the part of the employees of the railroad system, I sincerely hope that the members of the committee will give this legislation your careful and favorable consideration. Mr. HARRIS. Thank you very much, Mr. Bailey. We are very glad to have had your statement. Mr. BAILEY. Thank you. Mr. HARRIS. Are there any questions? Mr. DIES. I would like to ask Mr. Bailey a question. Mr. HARRIS. Mr. Dies. Mr. DIES. Is it not a fact that we passed a bill last session granting increases to retired Government employees, raising the annuities of all Government employees? Mr. BAILEY. We are not speaking of Government employees. Mr. BAILEY. Yes, sir, that is true. Mr. DIES. That was on account of the increase in the cost of living. Mr. BAILEY. That is right. Mr. DIES. I understand that this has nothing to do with Government employees, but I think there has been that precedent of increasing the annuities or retirements or whatever it may be, because of the increase in the cost of living. Mr. BAILEY. That is true. I now would like to make some comments on the question asked by the gentleman from Maine, Mr. Hale, of Mr. Herlong, who preceded me as a witness. I believe that we should approve section 5 of this bill which provides for an exemption of that part of the wage earner's wages that he pays into this retirement fund. It is a kind of compulsory social security. But I think it goes into a good cause. It is in accordance with that Mr. HALE. It is a tax. Mr. BAILEY. I am speaking now of exemption of the tax. I believe that it should be offered as an inducement for them to have membership in this retirement fund and to create annuities in connection with their retirements, that will keep them off of the dole and keep them off the direct relief rolls. I think it is a good gesture. Mr. DIES. Well, going back to what I said: My understanding is that everybody who was on retirement, Government employees, had their retirement increased without paying anything more into the fund. I am a little hazy about that bill, but I know that it has passed and I know that some of them got 9 or 10 percent across the board; those who were already retired. Mr. BAILEY. That is true. Mr. DIES. There was no requirement whatsoever that they pay any additional amount into the fund. Mr. BAILEY. As I recall—and if I am wrong some member of the committee can correct me-we increased those to $1,400, I think. Mr. DIES. At any rate, they all got substantial increases from the fund without paying anything into the fund. Here you propose that they pay increases, but coupled with that a provision thatthey must contribute to the fund in order to get the increase. Mr. BAILEY. I recall that we did grant those increases. Mr. BAILEY. Increases to employees who were already retired, who were getting retirement payments. Mr. DIES. Yes, they got increases. However, I have forgotten, or I do not remember whether they were just given percentage increases, or we raised the exemptions. But I know that I read a detailed statement showing the result of the increase and it was a substantial increase across the board. Mr. HARRIS. Thank you very much, Mr. Bailey. We appreciate your views as you have always shown an interest in this subject. We are glad to have your statement. Mr. BAILEY. Thank you. STATEMENT OF HON. JAMES G. POLK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO Mr. HARRIS. Mr. Polk, of Ohio, is present. Mr. Polk, we will be glad to hear you. Mr. POLK. Mr. Chairman and members of the committee, for the record, I am Congressman James G. Polk, of the Sixth Ohio District. I am appearing before the committee this morning in behalf of the bill, H. R. 9564, which I introduced sometime ago. And may I say this is a companion bill to Chairman Harris' bill, H. R. 9065, and I want to appear this morning, strongly urging your committee to favorably report Mr. Harris' bill, which is identical with the bill which I introduced as H. R. 9564. I believe this is an increase that is long overdue and I strongly urge the committee to favorably report the bill without amendment. Thank you very much. Mr. HARRIS. We thank you very much. I will say to our colleague that we very much appreciate your interest in this program. It is a pleasure for me to know that so many of our colleagues are interested in doing something for the retired employees of the railroad industry, but yet keeping in mind that this fund must be kept on a financially sound basis, because so many thousands of our people are depending on it. Your bill, I notice, is H. R. 9564. Mr. POLK. That is right, Mr. Chairman. ai nibastarobou v.M,: bisa, Ijodw of food giggleW a M Mr. HARRIS. It will be included in the record of our benvolging en of the bill. record of our hearings, s ing your cosponsorship of svo frontiw boasoroni tnemeriter Tiedt POLK IS Thank you very much, Mr. HARRIS. Are there any questions to emoz tedt word I bas dt juods ysed elttil e me I bout Thank you very much. We are glad to 9ur ai tedT. YOUA, M We will hear next from Congressman Friedel, who is a member of this committee. baut odt otni Jauoms Isnoitibbs Lti bae. Heper MENT OF HON. SAMUEL N. FRIEDEL, A REPRÉSENTAIN STATEME edt mot M CONGRESS FROM THE STATE OF MARYLAND teat sengorg y Mr. FRIEDEL Final Mr. Chairman and nd members of the committee, I had the pleasure of appearing before this committee appearing before this committee on my bill. H. R. non 3590, on January 24, I believe that H. R. 3590 is a good bill because it provides much-needed relief for the thousands of deserving retired railroaders and their families. during the testimony at these hearings it was brought out that the cost factor involved was too high, and therefore would have weakened the entire railroad retirement system.1999 eur snow ved 19ded redmemer ton ob Since then, another bill has been introduced by the chairman of this subcommittee, H. R. 9065, which also provides relief for the railCu roader and his family, and which I believe has a better chance of being enacted Convinced of the merits of this bill, I have introduced a companion measure, HR. 9597. These bills include three main e varfe proposals which are stated here briefly: noise or even of bely ere (1) These bills provide for a much needed increase of 15 P percent in benefits for thousands of pensioners, widows, and other beneficiaries under the Railroad Retirement Act. гамAL MOH чо тизмятата и кон по of these bills impose an additional 1 percent tax on 1011101111 tax on the railroads and their employees. (3) The tax on employees would be immediately offset by exempting the employee's tax from gross wages in the computation of their income tax. Workers in Canada and Great Britain presently have such an exemption benefit. Under this amendment, most railway employees would ultimately be taxed less than they are now under the 64 percent tax, on the proposed tax of 74 percent under these bills. HR H. R. 9065, the original bill, and the many companion measures which have been introduced, including my bill H. R. 9597, are finding widespread support both in and out of Congress. I hope these biffs will be favorably considered and reported by this ill be favorably considered and reported by this committee and passed by the House and Senate promptly and enacted into law. Thank you. 19 DO AT NAULAGASY Hy dandt WaАHM, Mr HARRIS, Thank you Mr. Friedens 10 Of Ba w Mr. Friedel. The next witness is our colleague, Mr. Bennett of Florida. qui de is up was frases ei I mergorq eidt ni teoret STATEMENT OF HON, CHARLES E. BENNETT, A REPRESENTATIVE CONGRESS FROM THE STATE OF FLORIDA Jaum baut Mr. BENNETT. Mr. Chairman, some time ago I requested an opporJi no gaibnegab es algo up to abasarodt tunity for Mr. J. R. Taylor, grand president of the Grand Association of Veteran Railway Employees, Inc., to testify before your subcom TO 21 hge Intasora yhdyid dood gand mareone memoride beoalisi odT mittee c concerning railroad retirement legislation. The subcommittee has very kindly granted this request, and Mr. Taylor was scheduled to appear before you today. Mr. Taylor has now advised me that he will be unable to appear, but has asked that I submit to you the report of the legislative committee of his organization, the chairman of which is Mr. W. B. Gunn, Accordingly, I am happy to present to this subcommittee the f the following statements from the report of their legislative Gunn: committee, signed by Mr. W. B. 19mm 963 THAT PROTO 02 1990 2Rit to I have checked the 6th Actuarial Report of the Railroad Retirement Board and find that it is the same. Perely a continuation of the 1953 report, and t the only thing I find is that thee methods are report the financial report do not jibe. 91971) bur Jntoq oldule i 1891 10 736 21 yuvil bOnewthing the hearings before the committee has brought out has been the possible authorization of the investment of a part of retirement funds in Govern ment insured mortgages. I think this a good idea. The fund is now drawing 3 percent, and this could earn up to 41⁄2 percent in Government-insured mortgages. Therefore, it occurs to me Congress could authorize the investment of up to 33% percent of our funds in these mortgages and realize a considerable additional sum. I submit this to the consideration of the membership. If the membership considers it favorably, then Congressman Bennett could be asked to take action in the matter. 31199190 GI s pigquizendus Hiw Jedi Satyng Jusntertidor to noitetu Mr. Taylor's letter of transmittal is as follows Heti szeri I am forwarding to you a report from our legislative committee, signed by Brother W. B. Gunn, chairman, which is self-explanatory. Referring to paragraph 2, I concur the financial repor the findings of the committee that the of the Railroad Retirement Board the actuarial report and jibe. The sixth actuarial report shows we are operating in the red, while the Railroad Retirement Board shows our financial position good, and quoting from their financial report, the February 1956 issue of the Monthly Review, volume 17, No. 2, 822 Rus] The fund as of July 1, dic payroll tax was increased from $300 to $350 per month, an increase in 19 months of $150,881,323, yet the actuarial report shows we are operating at a deficit. This should be looked into, as railroad employees are now paying a higher rate of payroll tax for pensions than any other group in the Referring to Brother Street, Chicago, Ill.: "Balance at end of period when $3,353,705,209, M relative to.. retirement funds in Government-insured mortga od T. 33% percent of At our regular meeting on March 3, the membership adopted resolutions favoring their recommendation that a part of the retirement fund be invested in Governmental mortgages. This further in seems to me a more equitable way of increasing the fund, rather than fed in the creasing the employee's payroll tax rate by 1 percent as RLEA-sponsored bills now in committee. We regret that we were unable to arrive at any cost recommendations on H. R. 3087 due to the confusing information in the sixth actuarial report, and the financial report put out by the Railroad Retirement Board,ebot roy stołod I would deeply appreciate serious and careful consideration by this subcommittee of these views.odt busp of 99ftimmos 2idt snold gai Mr. HARRIS. We thank you, Mr. Bennett, and appreciate your bring ing to our attention the views of the Association of Veteran Railway Employeeston ob 1 bas zaur mm szont to ene, div teilimet „9-ton The next witness is our colleague from Kentucky, Mr. Perkins.meib -91 spasbaoq 91100 to aurudov oldatobi : 100 # 2-97yno') to nojeros zidi STATEMENT OF HON. CARL D. PERKINS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KENTUCKY vd balofts bas Jagansory, lengway & hauol oved I teet teril tuo talog of darw I Mr. PERKINS There are a number of proposals, including my own, before this committee, but H. R. 9065, introduced by the Honorable Oren Harris, covers the most pressing needs of this program, and I will confine my remarks to the provisions of that bill. feufw batosï |